Overcoming Information Asymmetry in Job Search : The Power of a Reference Letter
The labor market is characterized by information gaps between work seekers and prospective employers, particularly when it comes to hiring low-skill entry level workers. Information asymmetries about workers’ skills can result in poorer matches, lo...
| Main Authors: | , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/508611524745860721/Overcoming-information-asymmetry-in-job-search-the-power-of-a-reference-letter http://hdl.handle.net/10986/29744 |
| Summary: | The labor market is characterized by
information gaps between work seekers and prospective
employers, particularly when it comes to hiring low-skill
entry level workers. Information asymmetries about workers’
skills can result in poorer matches, lower productivity for
employers, and increased inequity for the unemployed. One
approach to resolving the asymmetry is introducing a formal
referral system: reference letters from former employers.
The authors finds that reference letters improve firms’
screening ability and employment outcomes, especially for
women. Despite their high value, the use of reference
letters in job applications is low, partly due to work
seekers underestimating their value. |
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