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Social Interactions and the Labor Market

  • Zenou, Yves

To better understand the way social networks operate in the labor market, we propose two simple models where individuals help each other finding a job. In the first one, job information flows between individuals having a link with each other and we show that an equilibrium with a clustering of workers with the same status is likely to emerge since, in the long run, employed workers tend to be friends with employed workers. In the second model, individuals interact with both strong and weak ties and decide how much time they spend with each of them. As in Granovetter, this model stresses the strength of weak ties in finding a job because they involve a secondary ring of acquaintances who have contacts with networks outside ego's network and therefore offer new sources of information on job opportunities. We then discuss some policy implications showing how these models can explain why ethnic minorities tend to experience higher unemployment rate than workers from the majority group.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9180.

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Date of creation: Oct 2012
Date of revision:
Handle: RePEc:cpr:ceprdp:9180
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  1. Patrick Bayer & Stephen Ross & Giorgio Topa, 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," NBER Working Papers 11019, National Bureau of Economic Research, Inc.
  2. Calvó-Armengol, Antoni & Zenou, Yves, 2001. "Job Matching, Social Network and Word-of-Mouth Communication," Seminar Papers 695, Stockholm University, Institute for International Economic Studies.
  3. John T. Addison & Pedro Portugal, 1998. "Job Search Methods and Outcomes," Working Papers w199808, Banco de Portugal, Economics and Research Department.
  4. Damm, Anna Piil, 2006. "Ethnic Enclaves and Immigrant Labour Market Outcomes: Quasi-Experimental Evidence," Working Papers 06-4, University of Aarhus, Aarhus School of Business, Department of Economics.
  5. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 1999. "The Rise and Decline of the American Ghetto," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 455-506, June.
  6. Zenou, Yves, 2011. "Explaining the Black/White Employment Gap: The Role of Weak Ties," CEPR Discussion Papers 8582, C.E.P.R. Discussion Papers.
  7. Harminder Battu & Paul Seaman & Yves Zenou, 2010. "Job Contact Networks and the Ethnic Minorities," CReAM Discussion Paper Series 1028, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  8. repec:oup:restud:v:68:y:2001:i:2:p:261-95 is not listed on IDEAS
  9. Sanjeev Goyal, 2007. "Introduction to Connections: An Introduction to the Economics of Networks
    [Connections: An Introduction to the Economics of Networks]
    ," Introductory Chapters, Princeton University Press.
  10. Harry J. Holzer, 1986. "Search Method Use by Unemployed Youth," NBER Working Papers 1859, National Bureau of Economic Research, Inc.
  11. Battu, Harminder & Mwale, McDonald & Zenou, Yves, 2005. "Oppositional Identities and the Labor Market," IZA Discussion Papers 1852, Institute for the Study of Labor (IZA).
  12. Selod, Harris & Zenou, Yves, 2005. "City Structure, Job Search and Labour Discrimination. Theory and Policy Implications," CEPR Discussion Papers 5009, C.E.P.R. Discussion Papers.
  13. Michele Pellizzari, 2004. "Do Friends and Relatives Really Help in Getting a Good Job?," CEP Discussion Papers dp0623, Centre for Economic Performance, LSE.
  14. Calvo-Armengol, Antoni & Verdier, Thierry & Zenou, Yves, 2007. "Strong and weak ties in employment and crime," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 203-233, February.
  15. Sergio Currarini & Paolo Pin & Matthew O. Jackson, 2007. "An Economic Model of Friendship: Homophily, Minorities and Segregation," Working Papers 2007_20, Department of Economics, University of Venice "Ca' Foscari".
  16. Calvo-Armengol, Antoni, 2004. "Job contact networks," Journal of Economic Theory, Elsevier, vol. 115(1), pages 191-206, March.
  17. 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.
  18. Patacchini, Eleonora & Zenou, Yves, 2008. "The strength of weak ties in crime," European Economic Review, Elsevier, vol. 52(2), pages 209-236, February.
  19. Andersson, Fredrik & Burgess, Simon & Lane, Julia, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment," IZA Discussion Papers 4423, Institute for the Study of Labor (IZA).
  20. Yannis M. Ioannides, 2012. "From Neighborhoods to Nations: The Economics of Social Interactions," Economics Books, Princeton University Press, edition 1, volume 1, number 9892.
  21. Fredrik Anderson & Simon Burgess & Julia Lane, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employees," The Centre for Market and Public Organisation 09/219, Department of Economics, University of Bristol, UK.
  22. Wahba, Jackline & Zenou, Yves, 2003. "Density, Social Networks and Job Search Methods: Theory and Application to Egypt," CEPR Discussion Papers 3967, C.E.P.R. Discussion Papers.
  23. Scott A. Boorman, 1975. "A Combinatorial Optimization Model for Transmission of Job Information through Contact Networks," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 216-249, Spring.
  24. repec:oup:qjecon:v:118:y:2003:i:1:p:329-357 is not listed on IDEAS
  25. Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
  26. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
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