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Social Networks, Job Search Methods and Reservation Wages: Evidence for Germany

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Author Info

  • Caliendo, Marco

    ()
    (University of Potsdam)

  • Schmidl, Ricarda

    ()
    (University of Mannheim)

  • Uhlendorff, Arne

    ()
    (University of Mannheim)

Abstract

In this paper we analyze the relationship between social networks and the job search behavior of unemployed individuals. It is believed that networks convey useful information in the job search process such that individuals with larger networks should experience a higher productivity of informal search. Hence, job search theory suggests that individuals with larger networks use informal search channels more often and substitute from formal to informal search. Due to the increase in search productivity, it is also likely that individuals set higher reservation wages. We analyze these relations using a novel data set of unemployed individuals in Germany containing extensive information on job search behavior and direct measures for the social network of individuals. Our findings confirm theoretical expectations. Individuals with larger networks use informal search channels more often and shift from formal to informal search. We find that informal search is mainly considered a substitute for passive, less cost intensive search channels. In addition to that, we find evidence for a positive relationship between the network size and reservation wages.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5165.

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Length: 29 pages
Date of creation: Sep 2010
Date of revision:
Publication status: published in: International Journal of Manpower, 2011, 32 (7), 796 - 824
Handle: RePEc:iza:izadps:dp5165

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
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Web page: http://www.iza.org

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Keywords: social networks; job search behavior; unemployment;

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References

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  1. Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December.
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  7. Harry J. Holzer, 1986. "Search Method Use by Unemployed Youth," NBER Working Papers 1859, National Bureau of Economic Research, Inc.
  8. Borghans, Lex & Duckworth, Angela Lee & Heckman, James J. & Weel, Bas ter, 2008. "The Economics and Psychology of Personality Traits," MERIT Working Papers 010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  9. Giorgio Topa & Stephen Ross & Patrick Bayer, 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Working Papers 05-23, Center for Economic Studies, U.S. Census Bureau.
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  11. Weber, Andrea & Mahringer, Helmut, 2002. "Choice and Success of Job Search Methods," Economics Series 125, Institute for Advanced Studies.
  12. Marco Caliendo & Deborah Cobb-Clark & Arne Uhlendorff, 2010. "Locus of Control and Job Search Strategies," Discussion Papers of DIW Berlin 979, DIW Berlin, German Institute for Economic Research.
  13. Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2011. "Friends’ networks and job finding rates," ISER Working Paper Series 2011-21, Institute for Social and Economic Research.
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  15. Koning, Pierre & Berg, Gerard J. van den & Ridder, Geert, 1997. "A structural analysis of job search methods and subsequent wages," Serie Research Memoranda 0036, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  16. repec:dgr:umaror:2008001 is not listed on IDEAS
  17. Lawrence M. Kahn & Stuart A. Low, 1988. "Systematic and Random Search A Synthesis," Journal of Human Resources, University of Wisconsin Press, vol. 23(1), pages 1-20.
  18. Groves, Melissa Osborne, 2005. "How important is your personality? Labor market returns to personality for women in the US and UK," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 827-841, December.
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  20. Borghans Lex & Lee Duckworth Angela & Heckman James J. & Weel Bas ter, 2008. "The Economics and Psychology of Personality Traits," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
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Citations

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Cited by:
  1. Caliendo, Marco & Uhlendorff, Arne, 2010. "Determinanten des Suchverhaltens von Arbeitslosen: Ausgewählte Erkenntnisse basierend auf dem IZA Evaluationsdatensatz," IZA Discussion Papers 5379, Institute for the Study of Labor (IZA).
  2. Constant, Amelie F. & Kahanec, Martin & Rinne, Ulf & Zimmermann, Klaus F., 2009. "Ethnicity, Job Search and Labor Market Reintegration of the Unemployed," IZA Discussion Papers 4660, Institute for the Study of Labor (IZA).
  3. Constant, Amelie & Krause, Annabelle & Rinne, Ulf & Zimmermann, Klaus F, 2011. "Economic Preferences and Attitudes of the Unemployed: Are Natives and Second Generation Migrants Alike?," CEPR Discussion Papers 8207, C.E.P.R. Discussion Papers.
  4. Glitz, Albrecht, 2013. "Coworker Networks in the Labour Market," IZA Discussion Papers 7392, Institute for the Study of Labor (IZA).
  5. Ronald Bachmann & Daniel Baumgarten, 2012. "How Do the Unemployed Search for a Job? – Evidence from the EU Labour Force Survey," Ruhr Economic Papers 0312, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  6. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).

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