Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/77682
Authors: 
Dhillon, Amrita
Iversen, Vegard
Torsvik, Gaute
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4309
Abstract: 
We study an important mechanism underlying employee referrals into informal low skilled jobs in developing countries. Employers can exploit social preferences between employee referees and potential workers to improve discipline. The profitability of using referrals increases with referee stakes in the firm, and, in most cases, with the strength of the social tie between the referee and the new recruit. We provide an empirical counterpart to these results using primary data covering low- and unskilled migrants in India. Consistent with the theoretical predictions, we find a high prevalence of workplace referral and strong kinship ties between referees and new recruits. Finally, workplace intermediaries are different from and typically in more prestigious' jobs than those recruited.
Subjects: 
networks
low- and unskilled jobs
India
moral hazard
employee referrals
efficiency wages
referee incentives
strength of ties
JEL: 
J41
J31
D82
D86
O12
O17
Document Type: 
Working Paper

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