Stupnytska, Y. & Zaharieva, A. (2014). *Explaining the U-Shape of the Referral Hiring Pattern in a Search Model with Heterogeneous Workers* (Center for Mathematical Economics Working Papers). Bielefeld: Center for Mathematical Economics.

","default":"Stupnytska Y, Zaharieva A (2014) Center for Mathematical Economics Working Papers; 511.Bielefeld: Center for Mathematical Economics.","frontiers":"Stupnytska, Y., and Zaharieva, A. (2014). Explaining the U-Shape of the Referral Hiring Pattern in a Search Model with Heterogeneous Workers.

Stupnytska, Yuliia, and Zaharieva, Anna. 2014. *Explaining the U-Shape of the Referral Hiring Pattern in a Search Model with Heterogeneous Workers*. Vol. 511. Center for Mathematical Economics Working Papers. Bielefeld: Center for Mathematical Economics.

","apa":"Stupnytska, Y., & Zaharieva, A. (2014). Stupnytska, Y., & Zaharieva, A. (2014). *Explaining the U-Shape of the Referral Hiring Pattern in a Search Model with Heterogeneous Workers* (Center for Mathematical Economics Working Papers, 511). Bielefeld: Center for Mathematical Economics.

","bio1":"Stupnytska Y, Zaharieva A (2014) Bielefeld: Center for Mathematical Economics."},"oa":1,"publisher":"Center for Mathematical Economics","status":"public","_id":"2712105","series_title":"Center for Mathematical Economics Working Papers","locked":"1","file_date_updated":"2019-09-06T09:18:29Z","abstract":[{"text":"This paper presents a search model with heterogeneous workers, social networks and\r\nendogenous search intensity. There are three job search channels available to the unemployed:\r\ncostly formal applications and two costless informal channels - through family and\r\nprofessional networks. The gain from being employed is increasing in the productivity, so\r\nthe lowest motivation for preparing formal applications is proved to be among the least\r\nproductive worker types. We assume that professional contacts exhibit a strong degree of\r\nhomophily, thus it is profitable for firms to direct their network search towards the more\r\nproductive incumbent employees. So the probability of a professional referral is increasing in\r\nthe productivity of the worker, which mitigates the incentives to use the formal channel of\r\nsearch. Therefore, the model predicts that workers in the right (left) tail of the productivity\r\ndistribution have the highest propensity of finding a job with a help of professional (family)\r\ncontacts, whereas the formal channel of search is mostly utilized by workers in the middle\r\nrange of the distribution. This explains the U-shaped referral hiring pattern in the model.\r\nThe endogenous sorting of workers across channels also implies that professional (family)\r\nreferrals are associated with wage premiums (penalties) compared to the formal channel of\r\nsearch. The average effect of referrals on wages is, however, ambiguous and depends on the\r\nrelative proportions of high and low productivity types in the population. These findings help\r\nto explain the contradicting empirical evidence concerning the effect of referrals on wages.","lang":"eng"}],"volume":511,"publication_status":"published","page":"31","year":"2014","has_accepted_license":"1"}]