Social Networks and Wages: It's All About Connections!
Empirical evidence suggests that networks of personal relations are very important in the micro dynamics of labor markets: irrespectively of the country and the occupation considered a high share of jobs are filled by social referrals. In this paper we add theoretical speculation and empirical evidence to this stylized fact shedding light on an apparent puzzle: the effect of informal contacts on wages. We, first, review the literature arguing that economic perspectives on the effect of social networks use on wages can benefit from considering differences in the nature of social ties. Second, we propose a formal model which considers two different informal contacts which we call "family" and "professional". The model predicts that while the use of the former type is likely to have a negative impact on wages, the opposite is true for the latter. Third, we use a relatively unexploited Italian data set to show how different ties have different properties and are likely to be used for different purposes. Finally, we concentrate on the relation between informal contacts and wages, obtaining results which are consistent with our theoretical insights.
|Date of creation:||15 May 2004|
|Date of revision:|
|Contact details of provider:|| Postal: Piazza dei Martiri della Liberta, 33, 56127 Pisa|
Web page: http://www.lem.sssup.it/
More information through EDIRC
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.:
- Saloner, Garth, 1985. "Old Boy Networks as Screening Mechanisms," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 255-67, July.
- Samuel Bentolila & Claudio Michelacci & Javier Suarez, 2010.
"Social Contacts and Occupational Choice,"
London School of Economics and Political Science, vol. 77(305), pages 20-45, 01.
- Javier Suarez & Samuel Bentolila & Claudio Michelacci, 2004. "Social Contacts and Occupational Choice," 2004 Meeting Papers 593, Society for Economic Dynamics.
- Samuel Bentolila & Claudio Michelacci & Javier Suarez, 2004. "Social Contacts And Occupational Choice," Working Papers wp2004_06, CEMFI.
- Bentolila, Samuel & Michelacci, Claudio & Suarez, Javier, 2004. "Social Contacts and Occupational Choice," CEPR Discussion Papers 4308, C.E.P.R. Discussion Papers.
- Holzer, Harry J, 1988.
"Search Method Use by Unemployed Youth,"
Journal of Labor Economics,
University of Chicago Press, vol. 6(1), pages 1-20, January.
- Yannis M. Ioannides & Linda Datcher Loury, 2002.
"Job Information Networks, Neighborhood Effects and Inequality,"
Discussion Papers Series, Department of Economics, Tufts University
0217, Department of Economics, Tufts University.
- 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.
- Matt Jackson, 2003.
"The Effects of Social Networks on Employment and Inequality,"
Theory workshop papers
658612000000000032, UCLA Department of Economics.
- Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
- Freeman, Richard B., 1998. "War of the models: Which labour market institutions for the 21st century?1," Labour Economics, Elsevier, vol. 5(1), pages 1-24, March.
- Checchi, Daniele & Ichino, Andrea & Rustichini, Aldo, 1999. "More equal but less mobile?: Education financing and intergenerational mobility in Italy and in the US," Journal of Public Economics, Elsevier, vol. 74(3), pages 351-393, December.
- Mortensen, Dale T. & Vishwanath, Tara, 1994.
"Personal contacts and earnings : It is who you know!,"
Elsevier, vol. 1(2), pages 187-201, March.
- Mortensen, D. T. & Vishwanath, T., 1995. "Personal contacts and earnings: It is who you know!," Labour Economics, Elsevier, vol. 2(1), pages 103-104, March.
- Datcher, Linda, 1983. "The Impact of Informal Networks of Quit Behavior," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 491-95, August.
- Luigi Pistaferri, 1999. "Informal Networks in the Italian Labor Market," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(3-4), pages 355-375, December.
- 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 306-30, July.
- David Autor, 2000.
"Wiring the Labor Market,"
NBER Working Papers
7959, National Bureau of Economic Research, Inc.
- Michele Pellizzari, 2004.
"Do friends and relatives really help in getting a good job?,"
LSE Research Online Documents on Economics
19980, London School of Economics and Political Science, LSE Library.
- Michele Pellizzari, 2010. "Do Friends and Relatives Really Help in Getting a Good Job?," ILR Review, Cornell University, ILR School, vol. 63(3), pages 494-510, April.
- Michele Pellizzari, 2004. "Do Friends and Relatives Really Help in Getting a Good Job?," CEP Discussion Papers dp0623, Centre for Economic Performance, LSE.
- Kugler, Adriana, 2002.
"Employee Referrals and Efficiency Wages,"
IZA Discussion Papers
633, Institute for the Study of Labor (IZA).
- Daniele Checchi, 2003. "The Italian educational system: family background and social stratification," Departmental Working Papers 2003-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July.
When requesting a correction, please mention this item's handle: RePEc:ssa:lemwps:2004/10. 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: ()
If references are entirely missing, you can add them using this form.