Virtual social currencies for unemployed people: social networks and job market access

Complementary currencies are developing all around the world, taking various forms (material or immaterial) and fulfilling various functions. They are frequently introduced in order to promote local economy development and to fight against social exclusion. In this paper, we analyze the particular case of virtual currency circulation inside a local community of unemployed people. We elaborate a model on the assumptions that the organization of LETS and the circulation of complementary currencies have two properties: (i) they help unemployed workers to overcome the double coincidence of want necessity of an informal sector founded on barter exchange; (ii) they contribute to maintain and develop unemployed workers' skills and employability. We study the global properties of a job market associating traditional short-term and long-term unemployment to the organization of LETS. Using a search theoretic model, we find that the initial level of trust of agents in the complementary currency(cies) but also the effective properties of this(ese) currency(cies) inside the LETS are crucial for LETS to survive and become permanent. We also find that if the stationary equilibrium of the job-market includes LETS, then LETS have a positive influence on the rate of employment, on the expected utility of employed workers, and are Pareto improving when the benchmark case is a job market without any LETS.