Overcoming Information Asymmetry in Job Search : The Power of a Reference Letter

Carranza, Eliana ; Pimkina, Svetlana

World Bank, Washington, DC

关键词: JOB APPLICATION;    JOB SEARCH;    YOUTH EMPLOYMENT;    LABOR MARKET;    REFERRALS;   

RP-ID  :  125801

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The labor market is characterized byinformation gaps between work seekers and prospectiveemployers, particularly when it comes to hiring low-skillentry level workers. Information asymmetries about workers’skills can result in poorer matches, lower productivity foremployers, and increased inequity for the unemployed. Oneapproach to resolving the asymmetry is introducing a formalreferral system: reference letters from former employers.The authors finds that reference letters improve firms’screening ability and employment outcomes, especially forwomen. Despite their high value, the use of referenceletters in job applications is low, partly due to workseekers underestimating their value.