Networks in Labor Markets: Wage and Employment Dynamics and Inequality
AbstractWe present a model of labor markets that accounts for the social network through which agents hear about jobs. We show that an improvement in the wage or employment status of either an agent's direct or indirect contacts leads to an increase in the agent's employment probability and expected wages, in the sense of first order stochastic dominance. A similar effect results from an increase in the network contacts of an agent. In terms of dynamics and patterns, we show that both wages and employment are positively associated (a strong form of correlation) across time and agents. We also analyze the decisions of agents regarding staying in the labor market or dropping out. If there are costs to staying in the labor market, and we compare two networks of agents that are identical except that one group starts with a worse wage status, then that group's drop-out rate will be higher that the other's and there will be a persistent difference in wages between the groups.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 55.
Date of creation: Apr 2003
Date of revision:
Networks; labor markets; employment; unemployment; wages; wage inequality; drop-out rates;
Other versions of this item:
- Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 132(1), pages 27-46, January.
- A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar).
If references are entirely missing, you can add them using this form.