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A Matching Model on the Use of Immigrant Social Networks and Referral Hiring

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  • Monica I. Garcia-Perez

    () (Department of Economics, St. Cloud State University)

Abstract

Using a simple search model, with urn-ball derived matching function, this paper investigates the effect of firm owner’s and coworkers’ nativity on hiring patterns and wages. In the model, social networks reduce search frictions and wages are derived endogenously as a function of the efficiency of the social ties of current employees. As a result, individuals with more efficient connections tend to receive higher wages and lower unemployment rate. However, because this efficiency depends on matching with same-type owners and coworkers, there is also a differential effect among workers’ wages in the same firm. This analysis highlights the potential importance of social connections and social capital for understanding employment opportunities and wage differentials between these groups.

Suggested Citation

  • Monica I. Garcia-Perez, 2012. "A Matching Model on the Use of Immigrant Social Networks and Referral Hiring," Working Papers 2012-21, Saint Cloud State University, Department of Economics.
  • Handle: RePEc:scs:wpaper:1221
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    File URL: http://repository.stcloudstate.edu/econ_wps/21/
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    More about this item

    Keywords

    immigration; search models; social networks; wage differential; hiring process.;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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