The Value of Reference Letters

48 Pages Posted: 12 Dec 2017 Last revised: 14 Dec 2017

See all articles by Martin Habel

Martin Habel

Middlebury College

Rulof Burger

Stellenbosch University

Patrizio Piraino

University of Cape Town - Faculty of Commerce - School of Economics

Date Written: December 11, 2017

Abstract

This paper shows 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 more than 60 percent, with women driving the effect. 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 encouraged to obtain a letter increase by 49 percent, closing the gender gap in the sample.

Keywords: Technology Industry, Technology Innovation, Rural Labor Markets

Suggested Citation

Habel, Martin and Burger, Rulof and Piraino, Patrizio, The Value of Reference Letters (December 11, 2017). World Bank Policy Research Working Paper No. 8266, Available at SSRN: https://ssrn.com/abstract=3086333

Martin Habel (Contact Author)

Middlebury College ( email )

Middlebury, VT 05753
United States

Rulof Burger

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

Patrizio Piraino

University of Cape Town - Faculty of Commerce - School of Economics ( email )

South Africa

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