What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice

S-Tier
Journal: Journal of Political Economy
Year: 2023
Volume: 131
Issue: 3
Pages: 633 - 686

Authors (4)

Guido Friebel (not in RePEc) Matthias Heinz (not in RePEc) Mitchell Hoffman (not in RePEc) Nick Zubanov (Universität Konstanz)

Score contribution per author:

2.011 = (α=2.01 / 4 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Employee referral programs (ERPs) are randomly introduced in a grocery chain. On direct effects, larger referral bonuses increase referral quantity but decrease quality, though the increase in referrals from ERPs is modest. However, the overall effect of having an ERP is substantial, reducing attrition by 15% and significantly decreasing labor costs. This occurs, partly, because referrals stay longer than nonreferrals, but, mainly, from indirect effects: nonreferrals stay longer in treated than in control stores. The most supported mechanism for these indirect effects is workers value being involved in hiring. Attrition impacts are larger in higher performing stores and better local labor markets.

Technical Details

RePEc Handle
repec:ucp:jpolec:doi:10.1086/721735
Journal Field
General
Author Count
4
Added to Database
2026-01-29