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Friends’ Networks and Job Finding Rates

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  • Lorenzo Cappellari

    () (DISCE, Università Cattolica)

  • Konstantinos Tatsiramos

    () (Institute for the Study of Labor Bonn)

Abstract

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.

Suggested Citation

  • Lorenzo Cappellari & Konstantinos Tatsiramos, 2010. "Friends’ Networks and Job Finding Rates," DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro ieil0059, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  • Handle: RePEc:ctc:serie4:ieil0059
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    File URL: http://www.unicatt.it/Istituti/EconomiaImpresaLavoro/Quaderni/ieil0059.pdf
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    Cited by:

    1. Francis Kramarz & Oskar Nordström Skans, 2014. "When Strong Ties are Strong: Networks and Youth Labour Market Entry," Review of Economic Studies, Oxford University Press, vol. 81(3), pages 1164-1200.
    2. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    3. Zaharieva, Anna, 2013. "Social welfare and wage inequality in search equilibrium with personal contacts," Labour Economics, Elsevier, vol. 23(C), pages 107-121.
    4. Ronald Bachmann & Daniel Baumgarten, 2013. "How do the unemployed search for a job? – Evidence from the EU Labour Force Survey," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-25, December.
    5. Nicoletta Balbo & Nicola Barban & Melinda Mills, 2013. "Friend and peer effects on entry into marriage and parenthood: A multiprocess approach," Working Papers 056, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    6. Adamopoulou, Effrosyni, 2012. "Peer Effects in Young Adults' Marital Decisions," UC3M Working papers. Economics we1228, Universidad Carlos III de Madrid. Departamento de Economía.
    7. Stephan Humpert & Christian Pfeifer, 2011. "Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective," Working Paper Series in Economics 214, University of Lüneburg, Institute of Economics.
    8. Effrosyni Adamopoulou & Ezgi Kaya, 2018. "Young Adults Living with their Parents and the Influence of Peers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(3), pages 689-713, June.
    9. repec:zbw:rwirep:0312 is not listed on IDEAS
    10. repec:ces:ifodic:v:13:y:2015:i:1:p:19160203 is not listed on IDEAS
    11. Manuela Deidda & Adriana Di Liberto & Marta Foddi & Giovanni Sulis, 2015. "Employment subsidies, informal economy and women’s transition into work in a depressed area: evidence from a matching approach," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-25, December.
    12. Gabriella Berloffa & Francesca Modena & Paola Villa, 2014. "Changing Labour Market Opportunities for Young People in Italy and the Role of the Family of Origin," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 227-252.
    13. Vincent Boucher & Marion Goussé, 2015. "Wage Dynamics and Peer Referrals," Cahiers de recherche 1514, CIRPEE.
    14. Luciana Méndez Errico, 2013. "The Impacts of Social Networks on Immigrants’ Employment Prospects: The Spanish Case 1997-2007," Working Papers wpdea1301, Department of Applied Economics at Universitat Autonoma of Barcelona.
    15. Ronald Bachmann & Daniel Baumgarten, 2012. "How Do the Unemployed Search for a Job? – Evidence from the EU Labour Force Survey," Ruhr Economic Papers 0312, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    16. Albrecht Glitz, 2015. "The Role of Coworker-based Networks in the Labour Market," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(1), pages 25-32, 04.
    17. Gabriella Cagliesi & Denise Hawkes & Max Tookey, 2015. "A Multidimensional approach to workless-ness: a matter of opportunities, social factors and individual's idiosyncrasies," DoQSS Working Papers 15-01, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    18. Zwysen, Wouter, 2013. "Where you go depends on where you come from: the influence of father’s employment status on young adult’s labour market experiences," ISER Working Paper Series 2013-24, Institute for Social and Economic Research.

    More about this item

    Keywords

    Networks; Unemployment; Friendship ties.;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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