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

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  • Linda Datcher Loury

Abstract

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.

Suggested Citation

  • Linda Datcher Loury, 2004. "Some Job Contacts are More Equal Than Others: Earnings and Job Information Networks," Discussion Papers Series, Department of Economics, Tufts University 0404, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0404
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    References listed on IDEAS

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    1. Marmaros, David & Sacerdote, Bruce, 2002. "Peer and social networks in job search," European Economic Review, Elsevier, vol. 46(4-5), pages 870-879, May.
    2. 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.
    3. 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.
    4. Harry J. Holzer, 1987. "Job Search by Employed and Unemployed Youth," ILR Review, Cornell University, ILR School, vol. 40(4), pages 601-611, July.
    5. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    6. Saloner, Garth, 1985. "Old Boy Networks as Screening Mechanisms," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 255-267, July.
    7. 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.
    8. 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.
    9. Giorgio Topa, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 261-295.
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    Cited by:

    1. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers 2009-31, University of Connecticut, Department of Economics.
    2. Webber, Douglas A., 2015. "Firm market power and the earnings distribution," Labour Economics, Elsevier, vol. 35(C), pages 123-134.
    3. Patrick Bayer & Stephen L. Ross & Giorgio Topa, 2008. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1150-1196, December.
    4. 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.
    5. Patrick Bayer & Stephen L. Ross, 2006. "Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application," Working papers 2006-13, University of Connecticut, Department of Economics, revised Jan 2009.
    6. 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.
    7. Xin, Guangyi, 2017. "Social Interaction and Labour Market Outcomes," MPRA Paper 80976, University Library of Munich, Germany.
    8. Colin Green, 2012. "Short Term Gain, Long Term Pain," Journal of Labor Research, Springer, vol. 33(3), pages 337-352, September.
    9. Jellal, Mohamed, 2014. "Une théorie des relations sociales emploi et inégalité [A theory of social relations jobs and inequality]," MPRA Paper 57512, University Library of Munich, Germany.
    10. Stéphane Mahuteau & P.N. (Raja) Junankar, 2008. "Do Migrants get Good Jobs in Australia? The Role of Ethnic Networks in Job Search," The Economic Record, The Economic Society of Australia, vol. 84(s1), pages 115-130, September.
    11. Mahuteau, Stephane & Junankar, Pramod, 2007. "Do Migrants succeed in the Australian Labour Market? Furher Evidence on Job Quality," MPRA Paper 8703, University Library of Munich, Germany, revised Mar 2008.
    12. Damiano Fiorillo & Nunzia Nappo, 2014. "Job satisfaction in Italy: individual characteristics and social relations," International Journal of Social Economics, Emerald Group Publishing, vol. 41(8), pages 683-704, August.
    13. Luciana Méndez Errico, 2013. "The Impacts of Social Networks on Immigrants’ Employment Prospects: The Spanish Case 1997-2007," Working Papers wpdea1301, Department of Applied Economics at Universitat Autonoma of Barcelona.

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