Evaluation
Workers without social connections may be disadvantaged in the labor market because employers favor applicants who have been referred. Researchers tested three interventions in an online labor market to investigate why employers are more likely to hire referred workers. First, referrals provide a signal that workers will perform well and have lower turnover. Referred workers outperformed and had lower churn than non-referred workers with the same observable characteristics. This is true even at companies to which they were not referred. Second, being referred makes workers more productive. Referred workers were particularly productive when they work with their referrers. However, workers’ concerns about their reputation with their referrer or their referrer’s position at the firm did not lead workers to exert more effort.