Upjohn Institute working paper ; 21-352
We study how referral hiring contributes to racial inequality in firm-level labor demand over the firm’s life cycle using data from Brazil. We consider a search model where referral networks are segregated, firms are more informed about the match quality of referred candidates, and some referrals are made by nonreferred employees. Consistent with the model, we find that firms are more likely to hire candidates and less likely to dismiss employees of the same race as the founder, but these differences diminish as firms’ cumulative hires increase. Referral hiring helps to explain racial differences in dismissals, seniority, and employer size.
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Miller, Conrad and Ian Schmutte. 2021. "The Dynamics of Referral Hiring and Racial Inequality: Evidence from Brazil." Upjohn Institute Working Paper 21-352. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp21-352