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Social networks and wages in Senegal’s formal sector

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  • Berardi, N.

Abstract

We develop a theoretical framework that considers the role played by moral hazard and the diversity of networks and cultures in the choice of hiring channel. In favoritism contexts social networks, and particularly strong ties, are adopted as hiring channels for unskilled jobs and result in wage penalties, while otherwise the opposite happens. We estimate an endogenous switching model for the case of Senegal's manufacturing formal sector and find, consistently with our theoretical predictions in case of favoritism, that informal hiring channels are preferred to fill unskilled vacancies and are associated with a wage penalty, especially when ties are stronger.

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  • Berardi, N., 2013. "Social networks and wages in Senegal’s formal sector," Working papers 429, Banque de France.
  • Handle: RePEc:bfr:banfra:429
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    Cited by:

    1. Rebien, Martina & Stops, Michael & Zaharieva, Anna, 2017. "Formal search and referrals from a firm's perspective," IAB Discussion Paper 201733, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Yogo, Urbain Thierry, 2011. "Social Network and Job Quality: Evidence from Cameroon," MPRA Paper 44936, University Library of Munich, Germany.
    3. Anne Hilger & Christophe Jalil Nordman & Leopold R. Sarr, 2018. "Cognitive and non-cognitive skills, hiring channels, and wages in Bangladesh," Working Papers DT/2018/11, DIAL (Développement, Institutions et Mondialisation).
    4. Berardi, Nicoletta & Seabright, Paul, 2011. "Professional Network and Career Coevolution," TSE Working Papers 11-258, Toulouse School of Economics (TSE).
    5. Catia Nicodemo & Gustavo Adolfo García, 2015. "Job Search Channels, Neighborhood Effects, and Wages Inequality in Developing Countries: The Colombian Case," The Developing Economies, Institute of Developing Economies, vol. 53(2), pages 75-99, June.
    6. Sharma Smriti & Nordman Christophe, 2018. "Pecuniary returns to working conditions in Viet Nam," WIDER Working Paper Series 72, World Institute for Development Economic Research (UNU-WIDER).
    7. Berardi, Nicoletta & Lalanne, Marie & Seabright, Paul, 2018. "Professional networks and their coevolution with executive careers: Evidence from North America and Europe," SAFE Working Paper Series 243, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
    8. Bilyk Olga & Sheron Iuliia, 2012. "Do informal networks matter in the Ukrainian labor market?," EERC Working Paper Series 12/11e, EERC Research Network, Russia and CIS.

    More about this item

    Keywords

    Social networks; Hiring channel; Wage differential.;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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