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Job recruitment networks and migration to cities in India

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Author Info

  • Vegard Iversen

    ()
    (School of Development Studies, University of East Anglia, Norwich)

  • Kunal Sen

    (IDPM, University of Manchester)

  • Arjan Verschoor

    (School of Development Studies, University of East Anglia, Norwich)

  • Amaresh Dubey

    (CSRD, Jawaharlal Nehru University, New Delhi`)

Abstract

Economists have focused on job search and supply-side explanations for network effects in labour transactions. This paper develops and tests an alternative explanation for the high prevalence of network-based labour market entry in developing countries. In our theoretical framework, employers use employee networks as screening and incentive mechanisms to improve the quality of recruitment. Our framework suggests a negative relationship between network use and the skill intensity of jobs, a positive association between economic activity and network use and a negative relationship between network use and pro-labour legislation. Furthermore, social identity effects are expected to intensify compared to information-sharing and other network mechanisms. Using data from an all-India Employment Survey we implement a novel empirical strategy to test these relationships and find support for our demand-side explanation.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 09-01.

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Length: 36 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:ind:isipdp:09-01

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  1. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
  2. Wahba, Jackline & Zenou, Yves, 2003. "Density, Social Networks and Job Search Methods: Theory and Application to Egypt," CEPR Discussion Papers 3967, C.E.P.R. Discussion Papers.
  3. Hatton, Timothy J. & Williamson, Jeffrey G., 1998. "The Age of Mass Migration: Causes and Economic Impact," OUP Catalogue, Oxford University Press, number 9780195116519.
  4. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
  5. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
  6. Timothy Besley & Robin Burgess, 2002. "Can labour regulation hinder economic performance? Evidence from India," LSE Research Online Documents on Economics 3779, London School of Economics and Political Science, LSE Library.
  7. Marmaros, David & Sacerdote, Bruce, 2002. "Peer and social networks in job search," European Economic Review, Elsevier, vol. 46(4-5), pages 870-879, May.
  8. D. Mazumdar, 1973. "Labour Supply in Early Industrialization: the Case of the Bombay Textile Industry," Economic History Review, Economic History Society, vol. 26(3), pages 477-496, 08.
  9. De Weerdt, Joachim, 2002. "Risk-Sharing and Endogenous Network Formation," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. R. Jason Faberman, 2005. "Studying the Labor Market with the Job Openings and Labor Turnover Survey," Working Papers 388, U.S. Bureau of Labor Statistics.
  11. Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September.
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Cited by:
  1. Dhillon, Amrita & Iversen, Vegard & Torsvik, Gaute, 2013. "Employee Referral, Social Proximity And Worker Discipline: Theory And Evidence From India," Working Papers in Economics 04/13, University of Bergen, Department of Economics.
  2. Laura Prota & Melanie Beresford, 2012. "The Factory Hierarchy in the Village: Recruitment Networks and Labour Control in Kong Pisei District of Cambodia," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(3), pages 103-122, October.

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