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Hiring through referrals

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  • Galenianos, Manolis

Abstract

An equilibrium search model of the labor market is combined with a social network. The key features are that the workers' network transmits information about jobs and that wages and firm entry are determined endogenously. Empirically, the inter-industry variation in aggregate matching efficiency is attributed to variation in referral use. The model predicts that the efficiency of the aggregate matching function is pro-cyclical which is consistent with empirical evidence.

Suggested Citation

  • Galenianos, Manolis, 2014. "Hiring through referrals," Journal of Economic Theory, Elsevier, vol. 152(C), pages 304-323.
  • Handle: RePEc:eee:jetheo:v:152:y:2014:i:c:p:304-323
    DOI: 10.1016/j.jet.2014.03.009
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Stupnytska, Yuliia, 2015. "Asymmetric information in a search model with social contacts," Center for Mathematical Economics Working Papers 548, Center for Mathematical Economics, Bielefeld University.
    2. Schmutte, Ian M., 2016. "Labor markets with endogenous job referral networks: Theory and empirical evidence," Labour Economics, Elsevier, vol. 42(C), pages 30-42.
    3. Eliason, Marcus & Hensvik, Lena & Kramarz, Francis & Nordstrom Skans, Oskar, 2017. "The Causal Impact of Social Connections on Firms' Outcomes," CEPR Discussion Papers 12135, C.E.P.R. Discussion Papers.
    4. Goyal, S., 2016. "Networks and Markets," Cambridge Working Papers in Economics 1652, Faculty of Economics, University of Cambridge.
    5. Pierre Picard & Yves Zenou, 2014. "Urban Spatial Structure, Employement and Social Ties," CREA Discussion Paper Series 14-31, Center for Research in Economic Analysis, University of Luxembourg.
    6. Christian Holzner & Makoto Watanabe, 2015. "Labor Market Equilibrium with Public Employment Agency," CESifo Working Paper Series 5245, CESifo Group Munich.
    7. Michele Battisti & Giovanni Peri & Agnese Romiti, 2016. "Dynamic Effects of Co-Ethnic Networks on Immigrants' Economic Success," NBER Working Papers 22389, National Bureau of Economic Research, Inc.
    8. Zaharieva, Anna, 2015. "Social contacts and referrals in a labor market with on-the-job search," Labour Economics, Elsevier, vol. 32(C), pages 27-43.
    9. Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2015. "With a little help from my friends? Quality of social networks, job finding and job match quality," European Economic Review, Elsevier, vol. 78(C), pages 55-75.
    10. Ian Schmutte, 2016. "How do social networks affect labor markets?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 304-304, October.
    11. Picard, Pierre M. & Zenou, Yves, 2015. "Urban Spatial Structure, Employment and Social Ties: European versus American Cities," IZA Discussion Papers 9166, Institute for the Study of Labor (IZA).
    12. Horváth, Gergely, 2014. "Occupational mismatch and social networks," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 442-468.
    13. Merlino, Luca Paolo, 2014. "Formal and informal job search," Economics Letters, Elsevier, vol. 125(3), pages 350-352.
    14. Yoske Igarashi, 2016. "Distributional effects of hiring through networks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 90-110, April.
    15. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, Elsevier.
    16. Arimoto, Yutaka & Machikita, Tomohiro & Tsubota, Kenmei, 2018. "Broker versus social networks in adverse working conditions: cross-sectional evidence from Cambodian migrants in Thailand," IDE Discussion Papers 686, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    17. R. Jason Faberman & Guido Menzio, 2016. "Evidence on the Relationship between Recruiting and Starting Wage," NBER Working Papers 22915, National Bureau of Economic Research, Inc.
    18. Stupnytska, Yuliia & Zaharieva, Anna, 2015. "Explaining U-shape of the referral hiring pattern in a search model with heterogeneous workers," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 211-233.
    19. Manolis Galenianos, 2016. "Referral networks and inequality," 2016 Meeting Papers 1173, Society for Economic Dynamics.
    20. Yannis M. Ioannides, 2015. "A DMP Model of Intercity Trade," Discussion Papers Series, Department of Economics, Tufts University 0808, Department of Economics, Tufts University.

    More about this item

    Keywords

    Search; Referrals; Social networks;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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