Previous articleNext article FreeH. Gregg Lewis PrizePDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreThe H. Gregg Lewis Prize for the best paper published in the Journal of Labor Economics during 2016–2017 has been awarded to Lena Hensvik and Oskar Nordström Skans for “Social Networks, Employee Selection, and Labor Market Outcomes,” which appeared in the October 2016 issue of the Journal.The Prize Committee consisted of Melvin Stephens Jr. (chair), Marianne Page, and Jessica Pan (previous Lewis Prize winner). Social networks have long been of interest to labor economists, and access to administrative data in recent years has allowed researchers to test the theoretical implications of network models. Hensvik and Skans examine the importance of employee referrals in the hiring of new workers. If high-quality workers tend to interact with other high-quality workers through their social networks, then employers can leverage these relationships through referrals in situations where the quality of potential hires is not easily observed. Employee referrals in the presence of networks yield predictions for the quality and wages of new hires as well as for the probability of using referrals in the hiring process. A long-standing hurdle to empirically testing these ideas, however, is information on worker quality that is unobserved by employers but is observed, perhaps imperfectly, by employees.Hensvik and Skans leverage population register data from Sweden to create a sample of newly hired and incumbent male workers. Worker networks are created through linking spells of overlapping employment at prior employers. Key to their analysis is that nearly every 18- or 19-year-old Swedish male underwent the military draft process in which they were subjected to both cognitive and noncognitive testing, with individuals kept unaware of their own test results. Using these test scores, which are available in the register data, along with information on networks through prior employment, the authors confirm the numerous predictions on the impact of referrals through employee networks. The finding that firms hire workers through the social ties of more productive employees has important implications for understanding wage inequality. The use of such employee referral networks implies that greater ability sorting in the labor market will increasingly work to the disadvantage of equally productive workers without access to high-ability ties. The committee was impressed with the authors’ creative use of population register data to study this important topic.Past H. Gregg Lewis Prize winners:1990–1991Robert Gibbons and Lawrence F. Katz1992–1993James N. Brown and Audrey Light1994–1995John Bound, Charles Brown, Greg J. Duncan, and Willard L. Rodgers1996–1997Christina H. Paxson and Nachum Sicherman1998–1999Derek A. Neal2000–2001H. Lorne Carmichael and W. Bentley MacLeod2002–2003Eric D. Gould2004–2005Pascal Courty and Gerald Marschke2006–2007Fabian Lange2008–2009Maxim Poletaev and Chris Robinson2010–2011William R. Kerr and William F. Lincoln2012–2013Laura Giuliano2014–2015Jessica Pan Previous articleNext article DetailsFiguresReferencesCited by Journal of Labor Economics Volume 36, Number 3July 2018 Published for the Society of Labor Economists, Economics Research Center/ NORC Article DOIhttps://doi.org/10.1086/698528 Views: 273Total views on this site © 2018 by The University of Chicago. All rights reserved.PDF download Crossref reports no articles citing this article.