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Some Job Contacts are More Equal Than Others: Earnings and Job Information Networks

  • Linda Datcher Loury

There is considerable disagreement about the effects of informal contacts on earnings. Some researchers report higher earnings for those who found their jobs through such contacts, some report lower earnings, and some report no effects. This paper uses data from the National Longitudinal Survey of Youth to address this issue. When contact effects for young male and female workers were measured in the aggregate, those who found their jobs through informal contacts fared no better than those using formal methods. However, if subgroup contact effects were measured, those who found their jobs through prior-generation male relatives most likely to convey high quality information to employers and workers earned at least 13 percent more than those using formal and other informal methods. This means that job network analyses should not focus exclusively on the use of informal contacts but should distinguish between contacts based on what they can potentially provide for jobseekers.

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File URL: http://ase.tufts.edu/econ/papers/200404.pdf
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Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0404.

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Date of creation: 2004
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Handle: RePEc:tuf:tuftec:0404
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  1. 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.
  2. 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.
  3. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  4. Linda Datcher Loury, 2004. "Job Tenure and Personal Contacts: Good Matches or Limited Choices?," Discussion Papers Series, Department of Economics, Tufts University 0417, Department of Economics, Tufts University.
  5. Marmaros, David & Sacerdote, Bruce, 2002. "Peer and social networks in job search," European Economic Review, Elsevier, vol. 46(4-5), pages 870-879, May.
  6. Scott A. Boorman, 1975. "A Combinatorial Optimization Model for Transmission of Job Information through Contact Networks," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 216-249, Spring.
  7. Saloner, Garth, 1985. "Old Boy Networks as Screening Mechanisms," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 255-67, July.
  8. Derek A. Neal & William R. Johnson, 1995. "The Role of Pre-Market Factors in Black-White Wage Differences," NBER Working Papers 5124, National Bureau of Economic Research, Inc.
  9. Harry J. Holzer, 1987. "Job search by employed and unemployed youth," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 40(4), pages 601-611, July.
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