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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BER Weekly

13 September 2021
It was a data-heavy week in SA, with the 2021Q2 real GDP data indicating that the economy had better-than-expected recovery momentum in the first half of the year. While growth remained solid in the second quarter, both the survey and actual data released last week revealed the significant impact that the range of shocks at the start of the third quarter...

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