Who You Know or What You Know? Job Search and Matching in the Presence of Network-Based Recruitment

This article analyses how employers and university-educated jobseekers behave when networks are overly used, and connections supersede merit in recruitment. It advances the debate by exploring the effects of networks on how the labour market for the university-educated functions, and how the normalisation of network-based recruitment affects this segment of the labour market. Using data from Sierra Leone, findings show that overuse of networks for recruitment can be harmful to the labour market, and is reminiscent of Schelling’s model where individual incentives lead to a collective result that is less desirable. Actions by firms promote perceptions of unfairness in the labour market. Jobseekers search based on the perceived probability of being recruited due to network membership, and not on the most compatible or desired job. The data show that some unconnected workers respond by limiting search, exiting the labour market, becoming underemployed, or attempting to build networks.