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Friends’ Networks and Job Finding Rates

  • Lorenzo Cappellari

    ()

  • Konstantinos Tatsiramos

    ()

Social interactions are believed to have important consequences for labor market outcomes. Yet the growing literature has been forced to rely on indirect definitions of a network. We present what we believe to be the first evidence that is able to use direct information on the role of close friends. In doing so, we address issues of correlated effects with instrumental variables and panel data. Our estimates suggest that there are large effects from friendship networks, which persist even after controlling for family networks. One additional employed friend increases a person’s job finding probability by approximately 13 percent. This is a result of endogenous social interactions. By testing among alternative mechanisms, our study provides the first evidence that network effects seem to be due to information transmission rather than to social norms or leisure complementarities.

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File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp11-40.pdf
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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/40.

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Date of creation: Sep 2011
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Handle: RePEc:lec:leecon:11/40
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  23. Christian Dustmann & Albrecht Glitz & Uta Schönberg, 2011. "Referral-based Job Search Networks," CReAM Discussion Paper Series 1114, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
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  26. Andrea Galeotti & Luca Paolo Merlino, 2014. "Endogenous Job Contact Networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 1201-1226, November.
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  28. van der Klaauw, B. & van Ours, J.C., 2003. "From welfare to work : Does the neighbourhood matter?," Other publications TiSEM 196c643f-07ca-496b-950c-b, Tilburg University, School of Economics and Management.
  29. 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.
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