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Friends' Networks and Job Finding Rates

  • Cappellari, Lorenzo

    ()

    (Università Cattolica del Sacro Cuore)

  • Tatsiramos, Konstantinos

    ()

    (University of Nottingham)

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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5240.

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Length: 35 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5240
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  1. Michele Pellizzari, 2010. "Do Friends and Relatives Really Help in Getting a Good Job?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(3), pages 494-510, April.
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  11. 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.
  12. 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.
  13. Antoni Calv�-Armengol & Eleonora Patacchini & Yves Zenou, 2009. "Peer Effects and Social Networks in Education," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1239-1267.
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  24. Uta Schoenberg & Albrecht Glitz & Christian Dustmann, 2011. "Referral-based Job Search Networks," 2011 Meeting Papers 350, Society for Economic Dynamics.
  25. Lori A. Beaman, 2012. "Social Networks and the Dynamics of Labour Market Outcomes: Evidence from Refugees Resettled in the U.S," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 128-161.
  26. Federico Cingano & Alfonso Rosolia, 2006. "People I Know: Workplace Networks and Job Search Outcomes," Temi di discussione (Economic working papers) 600, Bank of Italy, Economic Research and International Relations Area.
  27. Fontaine, Francois, 2007. "A simple matching model with social networks," Economics Letters, Elsevier, vol. 94(3), pages 396-401, March.
  28. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers 2009-31, University of Connecticut, Department of Economics.
  29. Manski, C.F., 1991. "Identification of Endogenous Social Effects: the Reflection Problem," Working papers 9127, Wisconsin Madison - Social Systems.
  30. van der Klaauw, Bas & van Ours, Jan C., 2003. "From welfare to work: does the neighborhood matter?," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 957-985, May.
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