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Friends’ Networks and Job Finding Rates

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  • Lorenzo Cappellari
  • Konstantinos Tatsiramos

Abstract

Social interactions are believed to have important consequences for labor market outcomes. Yet the growing literature has been forced to rely on indirect definitions of a network. We present what we believe to be the first evidence that is able to use direct information on the role of close friends. In doing so, we address issues of correlated effects with instrumental variables and panel data. Our estimates suggest that there are large effects from friendship networks, which persist even after controlling for family networks. One additional employed friend increases a person’s job finding probability by approximately 13 percent. This is a result of endogenous social interactions. By testing among alternative mechanisms, our study provides the first evidence that network effects seem to be due to information transmission rather than to social norms or leisure complementarities.

Suggested Citation

  • Lorenzo Cappellari & Konstantinos Tatsiramos, 2011. "Friends’ Networks and Job Finding Rates," Discussion Papers in Economics 11/40, Division of Economics, School of Business, University of Leicester.
  • Handle: RePEc:lec:leecon:11/40
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
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    Cited by:

    1. Andrea Galeotti & Luca Paolo Merlino, 2014. "Endogenous Job Contact Networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1201-1226, November.
    2. Zaharieva, Anna, 2013. "Social welfare and wage inequality in search equilibrium with personal contacts," Labour Economics, Elsevier, vol. 23(C), pages 107-121.
    3. Nicoletta Balbo & Nicola Barban & Melinda Mills, 2013. "Friend and peer effects on entry into marriage and parenthood: A multiprocess approach," Working Papers 056, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    4. Adamopoulou, Effrosyni, 2012. "Peer Effects in Young Adults' Marital Decisions," UC3M Working papers. Economics we1228, Universidad Carlos III de Madrid. Departamento de Economía.
    5. Duc Anh Dang, 2019. "Social Networks and Employment Performance: Evidence from Rural–Urban Migration in Vietnam," Population Economics, in: Amy Y. C. Liu & Xin Meng (ed.), Rural-Urban Migration in Vietnam, pages 143-165, Springer.
    6. Bavaro, Michele & Patriarca, Fabrizio, 2022. "Referrals, intergenerational mobility and human capital accumulation," Economic Modelling, Elsevier, vol. 110(C).
    7. Stephan Humpert & Christian Pfeifer, 2013. "Explaining age and gender differences in employment rates: a labor supply-side perspective [Eine Erklärung alters- und geschlechtsspezifischer Unterschiede in den Beschäftigungsquoten: Die Sicht de," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 46(1), pages 1-17, March.
    8. Effrosyni Adamopoulou & Ezgi Kaya, 2018. "Young Adults Living with their Parents and the Influence of Peers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(3), pages 689-713, June.
    9. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    10. Vincent Boucher & Marion Gousse, 2019. "Wage Dynamics and Peer Referrals," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 1-23, January.
    11. Gabriella Berloffa & Francesca Modena & Paola Villa, 2014. "Changing Labour Market Opportunities for Young People in Italy and the Role of the Family of Origin," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 227-252.
    12. Cagliesi, Maria & Hawkes, Denise & De Vita, Riccardo, 2012. "A multidimensional approach to worklessness: a matter of opportunities, social factors and individual’s idiosyncrasies," Greenwich Papers in Political Economy 7747, University of Greenwich, Greenwich Political Economy Research Centre.
    13. Francis Kramarz & Oskar Nordström Skans, 2014. "When Strong Ties are Strong: Networks and Youth Labour Market Entry," Review of Economic Studies, Oxford University Press, vol. 81(3), pages 1164-1200.
    14. Albrecht Glitz, 2015. "The Role of Coworker-based Networks in the Labour Market," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(1), pages 25-32, 04.
    15. Manuela Deidda & Adriana Di Liberto & Marta Foddi & Giovanni Sulis, 2015. "Employment subsidies, informal economy and women’s transition into work in a depressed area: evidence from a matching approach," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-25, December.
    16. Ronald Bachmann & Daniel Baumgarten, 2013. "How do the unemployed search for a job? – Evidence from the EU Labour Force Survey," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-25, December.
    17. Albrecht Glitz, 2015. "The Role of Coworker-based Networks in the Labour Market," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(01), pages 25-32, April.
    18. Obbey Ahmed Elamin, 2018. "Impact of Informal Job-search on Wages for University Graduates in Egypt and Jordan," Working Papers 1272, Economic Research Forum, revised 19 Dec 2018.
    19. repec:zbw:rwirep:0312 is not listed on IDEAS
    20. repec:ces:ifodic:v:13:y:2015:i:1:p:19160203 is not listed on IDEAS
    21. Luciana Méndez Errico, 2013. "The Impacts of Social Networks on Immigrants’ Employment Prospects: The Spanish Case 1997-2007," Working Papers wpdea1301, Department of Applied Economics at Universitat Autonoma of Barcelona.
    22. 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.
    23. Zwysen, Wouter, 2013. "Where you go depends on where you come from: the influence of father’s employment status on young adult’s labour market experiences," ISER Working Paper Series 2013-24, Institute for Social and Economic Research.

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    More about this item

    Keywords

    Social Interactions; Unemployment; Friendship ties;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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