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Do workers really benefit from their social networks ?

Author

Listed:
  • François FONTAINE

    (Université Strasbourg 3, BETA-CNRS and IZA)

Abstract

This paper provides a simple matching model in which unemployed workers and employers can be matched together trough social network or trough more formal methods of search. We show that this crowding-out effect may be socially costly. For that reason, a policy increasing the social capital of the disadvantaged workers can increase the unemployment rate and decrease worker’s output.

Suggested Citation

  • François FONTAINE, 2008. "Do workers really benefit from their social networks ?," Discussion Papers (REL - Recherches Economiques de Louvain) 2008011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2008011
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    File URL: http://sites.uclouvain.be/econ/DP/REL/2008011.pdf
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    Citations

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    Cited by:

    1. Zaharieva, Anna, 2013. "Double Matching: Social Contacts in a Labour Market with On-the-Job Search," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79891, Verein für Socialpolitik / German Economic Association.
    2. Fabio Sabatini, 2005. "Social capital, labour precariousness and the economic performance. An empirical assessment of the strength of weak ties in Italy," AICCON Working Papers 26-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    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. Buhai, I. Sebastian & van der Leij, Marco J., 2023. "A Social Network Analysis of Occupational Segregation," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    5. Duran Miguel A. & Morales Antonio J., 2014. "The Rise and Spread of Favoritism Practices," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 397-414, January.
    6. Fontaine, François, 2008. "Why are similar workers paid differently? the role of social networks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(12), pages 3960-3977, December.
    7. Trockel, Walter, 2014. "Robustness of intermediate agreements for the discrete Raiffa solution," Games and Economic Behavior, Elsevier, vol. 85(C), pages 32-36.
    8. Zaharieva, Anna, 2015. "Social contacts and referrals in a labor market with on-the-job search," Labour Economics, Elsevier, vol. 32(C), pages 27-43.
    9. Samuel Bentolila & Claudio Michelacci & Javier Suarez, 2010. "Social Contacts and Occupational Choice," Economica, London School of Economics and Political Science, vol. 77(305), pages 20-45, January.
    10. Evgeniya Polyakova & Larisa Smirnykh, 2015. "The Impact of Sectoral Segregation on the Earning Differential between Natives and Immigrants in Russia," HSE Working papers WP BRP 110/EC/2015, National Research University Higher School of Economics.
    11. Fontaine, Francois, 2007. "A simple matching model with social networks," Economics Letters, Elsevier, vol. 94(3), pages 396-401, March.
    12. Yang LIU, 2015. "The Role of Individual Social Capital in Wage Determination: Evidence from China," Discussion papers 15133, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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