The value of reference letters

Stellenbosch Working Paper Series No. WP06/2017
 
Publication date: June 2017
 
Author(s):
[protected email address] (Faculty of Arts and Sciences, Harvard University)
[protected email address] (Department of Economics, Stellenbosch University)
[protected email address] (School of Economics, University of Cape Town)
 
Abstract:

We show that reference letters from former employers alleviate information asymmetries about workers’ skills and improve both match quality and equity in the labor market. A resume audit study finds that using a reference letter in the application increases callbacks by 61%. Women disproportionately benefit. Letters are effective because they provide valuable information about workers’ skills that employers use to select applicants of higher ability. A second experiment, which encourages job seekers to obtain and use a reference letter, finds consistent results. In particular, employment rates for women who obtain letters double, fully closing the gender gap in our sample.

 
JEL Classification:

D83, J24, M51

Keywords:

Unemployment, references, South Africa, active labor market policies

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Dominating the domestic headlines last week was the news that South Africa exited a technical recession in 2018Q3. While this was widely expected, the pace of GDP growth surprised on the upside. More on this in the domestic section. After the release of some survey data for the fourth quarter (see domestic section for details), a spate of actual activity...

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BER Weekly

10 December
Dominating the domestic headlines last week was the news that South Africa exited a technical recession in 2018Q3. While this was widely expected, the pace of GDP growth surprised on the upside. More on this in the domestic section. After the release of some survey data for the fourth quarter (see domestic section for details), a spate of actual activity...

Read the full issue