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Distributional effects of hiring through networks

Author

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  • Yoske Igarashi

    (Department of Economics, University of Exeter)

Abstract

How would a policy that bans the use of networks in hiring (e.g., anti-old boy network laws) affect welfare? To answer this question, we examine a variant of Galenianos (2013), a version of a random search model with two matching technologies: a standard matching function and worker networks. Our model has two types of workers, networked workers and non-networked workers. It is shown that the effects of such a policy on non-networked workers can be either positive or negative, depending on model parameters. In our calibration such a policy would make non-networked workers slightly worse off and networked workers substantially worse off.

Suggested Citation

  • Yoske Igarashi, 2013. "Distributional effects of hiring through networks," Discussion Papers 1309, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:1309
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    File URL: https://exetereconomics.github.io/RePEc/dpapers/DP1309.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    random search; network; referral; policy analysis; welfare; dynamics.;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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