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Title: Information, Mobile Communication, and Referral Effects

Author(s): Panle Jia Barwick, Yanyan Liu, Eleonora Patacchini and Qi Wu

Publication Date: June 2019

Keyword(s): Entrop, Information, Mobile Communication, Social Networks and Urban Labor Market

Programme Area(s): Development Economics, Industrial Organization, Labour Economics and Public Economics

Abstract: Information is a crucial ingredient in economic decision making. Yet measuring the extent of information exchange among individuals and its effect on economic outcomes is a difficult task. We use the universe of de-identified cellphone usage records from more than one million users in a Chinese city over twelve months to quantify information exchange among individuals and examine the role of referrals -- human carriers of information -- in urban labor markets. We present the first evidence that information flow (measured by call volume) correlates strongly with worker flows, a pattern that persists at different levels of geographic aggregation. Condition on information flow, socioeconomic diversity in information sources (social contacts), especially that associated with the working population, is crucial and helps to predict worker flows. We supplement our phone records with auxiliary data sets on residential housing prices, job postings, and firm attributes from administrative data. Information passed on through referrals is valuable: referred jobs are associated with higher monetary gains, a higher likelihood to transition from part-time to full-time, reduced commuting time, and a higher probability of entering desirable jobs. Referral information is more valuable for young workers, people switching jobs from suburbs to the inner city, and those changing their industrial sector. Firms receiving referrals are more likely to have successful recruits and experience faster growth.

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Bibliographic Reference

Jia Barwick, P, Liu, Y, Patacchini, E and Wu, Q. 2019. 'Information, Mobile Communication, and Referral Effects'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13786