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Job recruitment networks and migration to cities in India

Author

Listed:
  • Vegard Iversen

    () (School of Development Studies, University of East Anglia, Norwich)

  • Kunal Sen

    (IDPM, University of Manchester)

  • Arjan Verschoor

    (School of Development Studies, University of East Anglia, Norwich)

  • Amaresh Dubey

    (CSRD, Jawaharlal Nehru University, New Delhi`)

Abstract

Economists have focused on job search and supply-side explanations for network effects in labour transactions. This paper develops and tests an alternative explanation for the high prevalence of network-based labour market entry in developing countries. In our theoretical framework, employers use employee networks as screening and incentive mechanisms to improve the quality of recruitment. Our framework suggests a negative relationship between network use and the skill intensity of jobs, a positive association between economic activity and network use and a negative relationship between network use and pro-labour legislation. Furthermore, social identity effects are expected to intensify compared to information-sharing and other network mechanisms. Using data from an all-India Employment Survey we implement a novel empirical strategy to test these relationships and find support for our demand-side explanation.

Suggested Citation

  • Vegard Iversen & Kunal Sen & Arjan Verschoor & Amaresh Dubey, 2009. "Job recruitment networks and migration to cities in India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 09-01, Indian Statistical Institute, New Delhi, India.
  • Handle: RePEc:ind:isipdp:09-01
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    File URL: http://www.isid.ac.in/~pu/dispapers/dp09-01.pdf
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    References listed on IDEAS

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    1. Marmaros, David & Sacerdote, Bruce, 2002. "Peer and social networks in job search," European Economic Review, Elsevier, vol. 46(4-5), pages 870-879, May.
    2. R. Jason Faberman, 2009. "Studying the Labor Market with the Job Openings and Labor Turnover Survey," NBER Chapters,in: Producer Dynamics: New Evidence from Micro Data, pages 83-108 National Bureau of Economic Research, Inc.
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    5. Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December.
    6. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
    7. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    8. Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September.
    9. De Weerdt, Joachim, 2002. "Risk-Sharing and Endogenous Network Formation," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. Amrita Dhillon & Vegard Iversen & Gaute Torsvik, 2013. "Employee Referral, Social Proximity and Worker Discipline: Theory and Evidence from India," CESifo Working Paper Series 4309, CESifo Group Munich.
    2. Dhillon, Amrita & Iversen, Vegard & Torsvik, Gaute, 2012. "Employee referral, social proximity and worker discipline," CAGE Online Working Paper Series 90, Competitive Advantage in the Global Economy (CAGE).
    3. Laura Prota & Melanie Beresford, 2012. "The Factory Hierarchy in the Village: Recruitments Networks and Labour Control in Kong Pisei District of Cambodia," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(3), pages 103-122, October.

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