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The role of referrals in immobility, inequality, and inefficiency in labor markets
Bolte,Lukas Immorlica,Nicole Jackson,Matthew O.
Bolte,Lukas
Immorlica,Nicole
Jackson,Matthew O.
Abstract
We study the consequences of job markets' heavy reliance on referrals. Referrals lead to more opportunities for workers to be hired, which lead to better matches and increased productivity but also disadvantage job seekers with few or no connections to employed workers, increasing inequality. Coupled with homophily, referrals also lead to immobility. We identify conditions under which distributing referrals more evenly reduces inequality and improves future productivity and mobility. We use the model to examine the short- and long-run welfare impacts of policies such as affirmative action and algorithmic fairness.
Description
Date
2026-04
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
Social networks, Information networks, Field experiments, Employment, Discrimination, Incentives, Dynamics, Outcomes, SDG 8 - Decent Work and Economic Growth, SDG 10 - Reduced Inequalities
Citation
Bolte, L, Immorlica, N & Jackson, M O 2026, 'The role of referrals in immobility, inequality, and inefficiency in labor markets', Journal of Labor Economics, vol. 44, no. 2, pp. 447-479. https://doi.org/10.1086/733048
License
info:eu-repo/semantics/embargoedAccess