Who Gets the Job Referral? Evidence from a Social Networks Experiment. American Economic Review, forthcoming

We use recruitment into a laboratory experiment in Kolkata, India to analyze how job networks select individuals for employment opportunities. We present evidence that indi-viduals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network. The experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants. We find that when faced with performance pay, individuals are more likely to refer co-workers and less likely to refer family members. High ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task.