Why Do Workers Make Job Referrals? Experimental Evidence from Ethiopia - IZA Discussion Paper - 18258 - November 2025

Sep 13, 2026

What motivates workers’ referral decisions? This paper combines a field experiment in a firm with urban social network data. Workers primarily refer those who previously referred them, and this reciprocity generates substantial on-the-job productivity losses while excluding less connected individuals. When referrals are incentivized, reciprocity decreases and workers screen more productive colleagues. Peripheral workers use referrals to form new reciprocal links that persist after 18 months, reinforcing network-based inequality through trade-offs between pecuniary and social incentives.

LanguageEnglish

CategoryPaper Templates

FormatPDF

Pages68

Reading Time24 min

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Introduction

Job referrals in social networks

The referral process and key gaps

Study approach and contributions

DISCUSSION PAPER SERIES IZA DP No. 18258 Why Do Workers Make Job Referrals? Experimental Evidence from Ethiopia Marc Witte NOVEMBER 2025 DISCUSSION PAPER SERIES IZA DP No. 18258 Why Do Workers Make Job Referrals? Experimental Evidence from Ethiopia Marc Witte VU Amsterdam, Tinbergen Institute and IZA NOVEMBER 2025 Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ISSN: 2365-9793 IZA – Institute of Labor Economics | Schaumburg-Lippe-Straße 5–9 53113 Bonn, Germany | Phone: +49-228-3894-0
Email: [publications@iza.org](publications@iza.org) | [www.iza.org](www.iza.org) | | --- | --- | --- | IZA DP No. 18258 NOVEMBER 2025 ABSTRACT Why Do Workers Make Job Referrals? Experimental Evidence from Ethiopia* What motivates workers’ referral decisions? Combining a field experiment in a firm and urban social network data, I first show that workers primarily refer those who previously referred them. This reciprocity leads to significant on-the-job productivity losses and excludes less connected individuals. Incentivized referrals reduce reciprocity and make workers screen more productive colleagues. Second, peripheral workers use referrals strategically to establish new and reciprocated links which persist after 18 months. These results are consistent with a network-based referral model where individuals trade off pecuniary and social incentives. The findings suggest that referrals through social networks can reinforce labor market inequalities. Keywords: job referrals, social networks, field experiment Corresponding author: Marc Witte VU Amsterdam School of Business and Economics De Boelelaan 1105 1081 HV Amsterdam The Netherlands [E-mail: m.j.witte@vu.nl](E-mail: m.j.witte@vu.nl) * I am grateful to Girum Abebe, Johannes Abeler, Steffen Altmann, Francis Bloch, Stefano Caria, Marcel Fafchamps, James Fenske, Simon Franklin, Douglas Gollin, Morgan Hardy, David Huffman, Clément Imbert, Ingo Isphording, Pramila Krishnan, Sylvie Lambert, Julien Labonne, Simon Quinn, Christopher Roth, Margaret Stevens, Alemayehu Seyoum Taffesse, Christopher Woodruff and Liam Wren-Lewis for helpful comments and to Alemayehu Woldu and Mersha Beletew for outstanding research assistance. I received helpful feedback from seminar participants at AixMarseille, Bilkent, Birmingham, Collegio Carlo Alberto, Exeter, Gothenburg, IZA, NYUAD, Oxford, UC3M and UEA, and from conference participants at NEUDC, SEEDEC, ABCA, RES, Warwick, CSAE, EEA, TADC-LBS and GLAD. Data collection and experimental implementation were funded by the International Growth Centre. The project would not have been possible without the constant support of Rose Page, Simon Quinn, CSAE, and EDRI. The research described in this article was approved by the Economics Departmental Research Ethics Committees (DREC) at the University of Oxford (ECONCIA16-17-003) . This ﬁeld experiment was registered in the American Economic Association Registry for randomized control trials under trial number AEARCTR-0002334 . 1 Introduction Job refe

FAQs

What is the main question the paper investigates about job referrals?

The paper asks what motivates workers’ decisions to refer others and how those decisions shape outcomes in networked firms and labor markets.

How do the authors test workers’ referral motivations?

They combine a firm-level field experiment that varies monetary and non-monetary benefits with urban social network data.

What role does reciprocity play in referral decisions and performance?

Workers primarily refer people who previously referred them; this reciprocity leads to significant on-the-job productivity losses and excludes less connected individuals.

Sep 13, 2026

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