Panel Paper: The Effect of Job Referrals on Labor Market Outcomes in Brazil

Thursday, November 7, 2019
Plaza Building: Concourse Level, Plaza Ballroom F (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Christopher J. O'Leary1, Tulio A. Cravo2, Ana Cristina Sierra2 and Leandro Justino Veloso2, (1)W.E. Upjohn Institute for Employment Research, (2)Inter-American Development Bank

Brazil has the world’s eighth largest economy with a population of more than 212 million. The labor force of over 100 million includes more than 60 percent working in formal sector jobs requiring federal income and payroll tax payments. Expanding formal sector employment is a policy goal of the Brazilian government. Formal sector employment has grown steadily over the past 20 years in Brazil while the share of employment in the informal sector has declined. A major institution facilitating the movement to formal sector employment is the National Labor System (SINE in Portuguese) that operates 1,500 employment centers in all 26 states and the federal district delivering unemployment insurance (UI) and active labor market programs. We begin our paper by reviewing previous studies about the effects of job interview referrals by public labor exchanges in the U.S., Europe, and Latin American Countries. We then report on results from our study supported by the Inter-American Development Bank (IDB) on the effects of SINE job interview referrals in Brazil. Impact estimates were produced through difference-in-difference computations in a quasi-experimental evaluation design using program administrative data and propensity score matching to create comparison groups. Analysis was based on data from SINE and RAIS (Relação Anual de Informações Sociais––Annual Social Information Report) for the years 2012 to 2016. Estimates from our study are broadly consistent with international evidence, but we examine a wider range of program impacts than previous Latin American studies. Results from our analysis suggest: 1) Referrals for job interviews from SINE increase the probability of finding a job within three months and reduce the number of months needed to find reemployment. 2) However, referrals shorten the average job tenure on the next job and result in lower monthly reemployment earnings. 3) SINE staff assisted job interview referrals result in higher rates of job placements than online self-referrals to job interviews. 4) SINE increases the rate of formal sector job placements for workers with lower educational attainment and skill levels, but it does not significantly increase the rate of job placements among the most qualified workers.