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Friends’ Networks and Job Finding Rates

  • Lorenzo Cappellari

    ()

    (DISCE, Università Cattolica)

  • Konstantinos Tatsiramos

    ()

    (Institute for the Study of Labor Bonn)

We investigate the effect of social interactions on labor market outcomes using a direct measure of social contacts based on information about individuals’ three best friends and their characteristics. We examine the effect of the number of employed friends on the transition from non-employment to employment, and we find the existence of significant network effects at the individual level. An additional employed friend increases the probability of finding a job by 3.7 percentage points. This finding is robust to specifications that address the endogeneity of friends’ employment status, which may be induced by correlation with unobserved individual attributes and feedback effects. Considering labor market outcomes, we find evidence of higher wages and employment stability for those with more employed friends, which is consistent with networks acting as an information transmission mechanism.

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File URL: http://www.unicatt.it/Istituti/EconomiaImpresaLavoro/Quaderni/ieil0059.pdf
File Function: First version, 2010
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Paper provided by Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE) in its series DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro with number ieil0059.

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Length: 32
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:ctc:serie4:ieil0059
Contact details of provider: Web page: http://www.unicatt.it/Istituti/EconomiaImpresaLavoro
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  1. Andrea Galeotti & Luca Paolo Merlino, 2014. "Endogenous Job Contact Networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 1201-1226, November.
  2. Michele Pellizzari, 2010. "Do Friends and Relatives Really Help in Getting a Good Job?," ILR Review, Cornell University, ILR School, vol. 63(3), pages 494-510, April.
  3. David Marmaros & Bruce Sacerdote, 2006. "How Do Friendships Form?," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 79-119.
  4. Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2007. "Identification of Peer Effects through Social Networks," IZA Discussion Papers 2652, Institute for the Study of Labor (IZA).
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  7. Stephen P. Jenkins & Lars Osberg, 2003. "Nobody to Play with?: The Implications of Leisure Coordination," Discussion Papers of DIW Berlin 368, DIW Berlin, German Institute for Economic Research.
  8. Patrick Bayer & Stephen L. Ross & Giorgio Topa, 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Working Papers 927, Economic Growth Center, Yale University.
  9. Deepti Goel & Kevin Lang, 2010. "Social Ties and the Job Search of Recent Immigrants," Working papers 189, Centre for Development Economics, Delhi School of Economics.
  10. 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.
  11. Yannis Ioannides & Adriaan Soetevent, 2006. "Wages and Employment in a Random Social Network with Arbitrary Degree Distribution," Discussion Papers Series, Department of Economics, Tufts University 0601, Department of Economics, Tufts University.
  12. Pierre Cahuc & François Fontaine, 2009. "On the efficiency of job search with social network," Post-Print hal-00395653, HAL.
  13. Mortensen, D. T. & Vishwanath, T., 1995. "Personal contacts and earnings: It is who you know!," Labour Economics, Elsevier, vol. 2(1), pages 103-104, March.
  14. van der Klaauw, B. & van Ours, J.C., 2003. "From welfare to work : Does the neighbourhood matter?," Other publications TiSEM 196c643f-07ca-496b-950c-b, Tilburg University, School of Economics and Management.
  15. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 531-542.
  16. Linda Datcher Loury, 2006. "Some Contacts Are More Equal than Others: Informal Networks, Job Tenure, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 299-318, April.
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  18. repec:oup:restud:v:76:y:2009:i:4:p:1239-1267 is not listed on IDEAS
  19. Christian Dustmann & Albrecht Glitz & Uta Schönberg, 2011. "Referral-based Job Search Networks," CReAM Discussion Paper Series 1114, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  20. Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009. "An Economic Model of Friendship: Homophily, Minorities, and Segregation," Econometrica, Econometric Society, vol. 77(4), pages 1003-1045, 07.
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  24. Yannis M. Ioannides & Giorgio Topa, 2010. "Neighborhood Effects: Accomplishments And Looking Beyond Them," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 343-362.
  25. repec:oup:restud:v:79:y:2012:i:1:p:128-161 is not listed on IDEAS
  26. Antoni Calvo-Armengol & Eleonora Patacchini & Yves Zenou, 2008. "Peer Effects and Social Networks in Education," CReAM Discussion Paper Series 0814, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  27. Lorenzo Cappellari & Stephen P. Jenkins, 2008. "Estimating low pay transition probabilities accounting for endogenous selection mechanisms," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 57(2), pages 165-186.
  28. Fontaine, Francois, 2007. "A simple matching model with social networks," Economics Letters, Elsevier, vol. 94(3), pages 396-401, March.
  29. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers 2009-31, University of Connecticut, Department of Economics.
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