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Friends' Networks and Job Finding Rates

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Author Info

  • Lorenzo Cappellari
  • Konstantinos Tatsiramos

Abstract

We investigate the effect of social interactions on labor market outcomes using a direct measure of social contacts based on information about individuals’ three best friends and their characteristics. We examine the effect of the number of employed friends on the transition from non-employment to employment, and we find the existence of significant network effects at the individual level. An additional employed friend increases the probability of finding a job by 3.7 percentage points. This finding is robust to specifications that address the endogeneity of friends’ employment status, which may be induced by correlation with unobserved individual attributes and feedback effects. Considering labor market outcomes, we find evidence of higher wages and employment stability for those with more employed friends, which is consistent with networks acting as an information transmission mechanism.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2010/wp-cesifo-2010-11/cesifo1_wp3243.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3243.

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Date of creation: 2010
Date of revision:
Handle: RePEc:ces:ceswps:_3243

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Keywords: networks; unemployment; friendship ties;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Jobless danger for wages
    by chris dillow in Stumbling and Mumbling on 2013-02-21 11:43:00
  2. A case for workfare
    by chris dillow in Stumbling and Mumbling on 2012-02-20 13:29:17
  3. "Social cleansing" and network effects
    by chris dillow in Stumbling and Mumbling on 2012-04-24 14:28:05
  4. "Social cleansing" and network effects
    by chris dillow in Stumbling and Mumbling on 2012-04-24 14:28:05
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Cited by:
  1. Humpert, Stephan & Pfeifer, Christian, 2013. "Explaining age and gender differences in employment rates : a labor supply side perspective," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 46(1), pages 1-17.
  2. Nordström Skans, Oskar & Kramarz, Francis, 2011. "When strong ties are strong – networks and youth labor market entry," Working Paper Series 2011:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Anna Zaharieva, 2011. "Social Welfare and Wage Inequality in Search Equilibrium with Personal Contacts," Working Papers 459, Bielefeld University, Center for Mathematical Economics.
  4. Effrosyni Adamopoulou, 2012. "Peer Effects in Young Adults' Marital Decisions," Economics Working Papers we1228, Universidad Carlos III, Departamento de Economía.

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