The Use of Informal Networks in Italian Labor Markets: Efficiency or Favoritisms?
A number of papers considers the use of informal networks (the help of relatives, friends and acquaintances) to find an employment as an efficient mechanism to match workers to jobs. However, evidence in Italy shows that informal networks tend to be used more in less productive jobs and less developed regions. We aim to show that informal networks – rather than being an efficient channel of information transmission – may interfere with a genuine process of selection of workers, favoring socially connected people in place of more talented workers. Using the Bank of Italy Survey on Household Income and Wealth (SHIW) we estimate with a Probit model the determinants of the probability of using informal networks. We find that informal networks tend to be used by low educated individuals, in low productivity jobs, in high unemployment areas, where opportunistic behavior are widespread and in jobs paying a wage rent. We offer a stripped-down model of nepotism to explain theoretically these findings.
|Date of creation:||15 Oct 2008|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003.
Journal of Finance,
American Finance Association, vol. 58(5), pages 2167-2202, October.
- Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2002. "Family Firms," Harvard Institute of Economic Research Working Papers 1944, Harvard - Institute of Economic Research.
- Andrei Shleifer & Fausto Panunzi & Mike Burkart, 2002. "Family Firms," FMG Discussion Papers dp406, Financial Markets Group.
- Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2002. "Family Firms," NBER Working Papers 8776, National Bureau of Economic Research, Inc.
- Burkart, Mike & Panunzi, Fausto & Shleifer, Andrei, 2002. "Family Firms," CEPR Discussion Papers 3234, C.E.P.R. Discussion Papers.
- Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003. "Family firms," LSE Research Online Documents on Economics 69549, London School of Economics and Political Science, LSE Library.
- Andrei Shleifer & Fausto Panunzi & Mike Burkart, 2002. "Family firms," LSE Research Online Documents on Economics 24926, London School of Economics and Political Science, LSE Library.
- Alberto Alesina & Paola Giuliano, 2010. "The power of the family," Journal of Economic Growth, Springer, vol. 15(2), pages 93-125, June.
- Alberto Alesina & Paola Giuliano, 2007. "The Power of the Family," NBER Working Papers 13051, National Bureau of Economic Research, Inc.
- Alesina, Alberto & Giuliano, Paola, 2007. "The Power of the Family," IZA Discussion Papers 2750, Institute for the Study of Labor (IZA).
- John T. Addison & Pedro Portugal, 2002. "Job search methods and outcomes," Oxford Economic Papers, Oxford University Press, vol. 54(3), pages 505-533, July.
- Addison, John T. & Portugal, Pedro, 1998. "Job Search Methods and Outcomes," ZEW Discussion Papers 98-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- John T. Addison & Pedro Portugal, 1998. "Job Search Methods and Outcomes," Working Papers w199808, Banco de Portugal, Economics and Research Department.
- Addison, John T. & Portugal, Pedro, 2001. "Job Search Methods and Outcomes," IZA Discussion Papers 349, Institute for the Study of Labor (IZA).
- Kugler, Adriana D., 2003. "Employee referrals and efficiency wages," Labour Economics, Elsevier, vol. 10(5), pages 531-556, October.
- Kugler, Adriana, 2002. "Employee Referrals and Efficiency Wages," IZA Discussion Papers 633, Institute for the Study of Labor (IZA).
- Kugler, Adriana D., 2002. "Employee Referrals and Efficiency Wages," CEPR Discussion Papers 3682, C.E.P.R. Discussion Papers.
- Adriana Kugler, 2002. "Employee referrals and efficiency wages," Economics Working Papers 647, Department of Economics and Business, Universitat Pompeu Fabra.
- Datcher, Linda, 1983. "The Impact of Informal Networks of Quit Behavior," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 491-495, August.
- Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162, September.
- Spagnolo, Giancarlo, 1999. "Social relations and cooperation in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 38(1), pages 1-25, January.
- Laband, David N & Lentz, Bernard F, 1992. "Self-Recruitment in the Legal Profession," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 182-201, April.
- 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, 01.
- Bentolila, Samuel & Michelacci, Claudio & Suarez, Javier, 2004. "Social Contacts and Occupational Choice," CEPR Discussion Papers 4308, C.E.P.R. Discussion Papers.
- Javier Suarez & Samuel Bentolila & Claudio Michelacci, 2004. "Social Contacts and Occupational Choice," 2004 Meeting Papers 593, Society for Economic Dynamics.
- Bernard F. Lentz & David N. Laband, 1989. "Why So Many Children of Doctors Become Doctors: Nepotism vs. Human Capital Transfers," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 396-413.
- Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
- Harry J. Holzer, 1988. "The Determinants of Employee Productivity and Earnings: Some New Evidence," NBER Working Papers 2782, National Bureau of Economic Research, Inc.
- Michela Ponzo & Vincenzo Scoppa, 2010. "A Simple Model Of Nepotism," Working Papers 201017, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
- De Paola, Maria & Scoppa, Vincenzo, 2005. "The Role of Family Ties in the Labour Market. An Interpretation Based on Efficiency Wage Theory," MPRA Paper 8956, University Library of Munich, Germany.
- David G. Blanchflower & Alex Bryson, 2003. "What Effect do Unions Have on Wages Now and Would 'What Do Unions Do' Be Surprised?," NBER Working Papers 9973, National Bureau of Economic Research, Inc.
- Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-979, July.
- Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
- Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
- Saloner, Garth, 1985. "Old Boy Networks as Screening Mechanisms," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 255-267, July.
- Francesco Caselli & Nicola Gennaioli, 2005. "Credit Constraints, Competition, and Meritocracy," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 679-689, 04/05.
- Simon, Curtis J & Warner, John T, 1992. "Matchmaker, Matchmaker: The Effect of Old Boy Networks on Job Match Quality, Earnings, and Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 306-330, July.
- Samuel Bentolila & Andrea Ichino, 2008. "Unemployment and consumption near and far away from the Mediterranean," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(2), pages 255-280, April. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:11764. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.