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Social networks and wages in Senegal’s formal sector

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  • Berardi, N.

Abstract

We develop a theoretical framework that considers the role played by moral hazard and the diversity of networks and cultures in the choice of hiring channel. In favoritism contexts social networks, and particularly strong ties, are adopted as hiring channels for unskilled jobs and result in wage penalties, while otherwise the opposite happens. We estimate an endogenous switching model for the case of Senegal's manufacturing formal sector and find, consistently with our theoretical predictions in case of favoritism, that informal hiring channels are preferred to fill unskilled vacancies and are associated with a wage penalty, especially when ties are stronger.

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Bibliographic Info

Paper provided by Banque de France in its series Working papers with number 429.

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Length: 42 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:bfr:banfra:429

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Keywords: Social networks; Hiring channel; Wage differential.;

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  1. Kramarz, Francis & Nordström Skans, Oskar, 2011. "When strong ties are strong Networks and youth labor market entry," Working Paper Series, Center for Labor Studies 2011:18, Uppsala University, Department of Economics.
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Cited by:
  1. Garcia, Gustavo Adolfo & Nicodemo, Catia, 2013. "Job Search Channels, Neighborhood Effects and Wages Inequality in Developing Countries: The Colombian Case," IZA Discussion Papers 7336, Institute for the Study of Labor (IZA).
  2. Berardi, Nicoletta & Seabright, Paul, 2011. "Professional Network and Career Coevolution," TSE Working Papers 11-258, Toulouse School of Economics (TSE).
  3. Yogo, Urbain Thierry, 2011. "Social Network and Job Quality: Evidence from Cameroon," MPRA Paper 44936, University Library of Munich, Germany.

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