Information channels in labor markets: On the resilience of referral hiring
AbstractEconomists and sociologists disagree over markets' potential to substitute for personal connections. We study a model of labor markets where social ties are stronger between similar individuals, and firms prefer to rely on personal referrals than to hire on the open market. Workers in the market can take a costly action that can signal their productivity. The paper asks whether signaling reduces the reliance on the network. We find that the network is remarkably resilient. Signaling is caught in two contradictory requirements: to be informative it must be expensive, but if it expensive it can be undercut by the network.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 66 (2008)
Issue (Month): 3-4 (June)
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Web page: http://www.elsevier.com/locate/jebo
Other versions of this item:
- Alessandra Casella & Nobuyuki Hanaki, 2005. "Information Channels in Labor Markets. On the Resilience of Referral Hiring," Working Papers 2005.37, Fondazione Eni Enrico Mattei.
- Casella, Alessandra & Hanaki, Nobuyuki, 2005. "Information Channels in Labour Markets. On the Resilience of Referral Hiring," CEPR Discussion Papers 4969, C.E.P.R. Discussion Papers.
- Alessandra Casella & Nobuyuki Hanaki, 2005. "Information channels in labor markets: On the resilience of referral hiring," Discussion Papers 0506-05, Columbia University, Department of Economics.
- A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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