Social networks and wages in Senegal’s formal sector
AbstractWe 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 InfoPaper provided by Banque de France in its series Working papers with number 429.
Length: 42 pages
Date of creation: 2013
Date of revision:
Social networks; Hiring channel; Wage differential.;
Find related papers by JEL classification:
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-CDM-2013-03-30 (Collective Decision-Making)
- NEP-DEV-2013-03-30 (Development)
- NEP-LAB-2013-03-30 (Labour Economics)
- NEP-LMA-2013-03-30 (Labor Markets - Supply, Demand, & Wages)
- NEP-NET-2013-03-30 (Network Economics)
- NEP-SOC-2013-03-30 (Social Norms & Social Capital)
- NEP-URE-2013-03-30 (Urban & Real Estate Economics)
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