Social Networks and Labour Market Transitions
We study the influence of social networks on labour market transitions. We develop the first model where social ties and job status co-evolve through time. Our key assumption is that the probability of formation of a new tie is greater between two employed individuals than between an employed and an unemployed individual. We show that this assumption generates negative duration dependence of exit rates from unemployment. Our model has a number of novel testable implications. For instance, we show that a higher connectivity among unemployed individuals reduces duration dependence and that exit rates depend positively on the duration of the last job held by the unemployed worker.
|Date of creation:||Aug 2004|
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99-5, Aarhus School of Business - Department of Economics.
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- Matt Jackson, 2003.
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"Social Interactions, Local Spillovers and Unemployment,"
97-17, C.V. Starr Center for Applied Economics, New York University.
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"The Anatomy of Unemployment Dynamics,"
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1202, C.E.P.R. Discussion Papers.
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"Unemployment dynamics and duration dependence,"
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4374742f-8d86-458d-9ab3-6, Tilburg University, School of Economics and Management.
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"An Economic Model of Friendship: Homophily, Minorities, and Segregation,"
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- Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-18, December.
- Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 265-292, October.
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