IDEAS home Printed from https://ideas.repec.org/p/wis/wpaper/1606.html
   My bibliography  Save this paper

Network Search: Climbing the Job Ladder Faster

Author

Listed:
  • Marcelo Arbex

    (Department of Economics, University of Windsor)

  • Dennis O'Dea

    (Department of Economics, University of Washington)

  • David Wiczer

    (Research Division, Federal Reserve Bank of St. Louis)

Abstract

We introduce a complex network into a search model in which workers find jobs through their network or directly from firms. This framework links heterogeneity in network position to heterogeneity in wage-employment dynamics: better-connected workers climb the job ladder faster, drawing more frequently from the network offer distribution which stochastically dominates the direct-search distribution. The mean- field approach allows a tractable, recursive formulation and our calibrated version is consistent with several empirical findings. Further, we present new evidence consistent with our model: Job-to-job switches use networks more frequently at higher rungs of the ladder.

Suggested Citation

  • Marcelo Arbex & Dennis O'Dea & David Wiczer, 2016. "Network Search: Climbing the Job Ladder Faster," Working Papers 1606, University of Windsor, Department of Economics.
  • Handle: RePEc:wis:wpaper:1606
    as

    Download full text from publisher

    File URL: http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1606.pdf
    File Function: First version, 2016
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fabien Postel-Vinay & Hélène Turon, 2010. "On-The-Job Search, Productivity Shocks, And The Individual Earnings Process," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(3), pages 599-629, August.
    2. Bontemps, Christian & Robin, Jean-Marc & van den Berg, Gerard J, 2000. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 305-358, May.
    3. Kugler, Adriana D., 2003. "Employee referrals and efficiency wages," Labour Economics, Elsevier, vol. 10(5), pages 531-556, October.
    4. Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    5. Guido Menzio & Irina Telyukova & Ludo Visschers, 2016. "Directed Search over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 38-62, January.
    6. Giorgio Topa & Aysegul Sahin & Andreas Mueller & Jason Faberman, 2014. "Job Search Behavior among the Employed and Unemployed," 2014 Meeting Papers 975, Society for Economic Dynamics.
    7. 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.
    8. 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.
    9. repec:eee:labchp:v:3:y:1999:i:pb:p:2567-2627 is not listed on IDEAS
    10. Stephen V. Burks & Bo Cowgill & Mitchell Hoffman & Michael Housman, 2015. "The Value of Hiring through Employee Referrals," The Quarterly Journal of Economics, Oxford University Press, vol. 130(2), pages 805-839.
    11. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    12. Galenianos, Manolis, 2014. "Hiring through referrals," Journal of Economic Theory, Elsevier, vol. 152(C), pages 304-323.
    13. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    14. 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.
    15. Hellerstein, Judith K. & Kutzbach, Mark J. & Neumark, David, 2019. "Labor market networks and recovery from mass layoffs: Evidence from the Great Recession period," Journal of Urban Economics, Elsevier, vol. 113(C).
    16. Fontaine, François, 2008. "Why are similar workers paid differently? the role of social networks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(12), pages 3960-3977, December.
    17. Vega-Redondo,Fernando, 2007. "Complex Social Networks," Cambridge Books, Cambridge University Press, number 9780521674096.
    18. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    19. Olivier Armantier & Giorgio Topa & Wilbert Van der Klaauw & Basit Zafar, 2017. "An overview of the Survey of Consumer Expectations," Economic Policy Review, Federal Reserve Bank of New York, issue 23-2, pages 51-72.
    20. Judith K. Hellerstein & Mark J. Kutzbach & David Neumark, 2015. "Labor Market Networks and Recovery from Mass Layoffs Before, During, and After the Great Recession," Working Papers 15-14, Center for Economic Studies, U.S. Census Bureau.
    21. Yannis M. Ioannides & Adriaan R. Soetevent, 2006. "Wages and Employment in a Random Social Network with Arbitrary Degree Distribution," American Economic Review, American Economic Association, vol. 96(2), pages 270-274, May.
    22. Jesper Bagger & Francois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages," Post-Print hal-01301431, HAL.
    23. 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, January.
    24. Gerard J. van den Berg & Geert Ridder, 1998. "An Empirical Equilibrium Search Model of the Labor Market," Econometrica, Econometric Society, vol. 66(5), pages 1183-1222, September.
    25. Marmaros, David & Sacerdote, Bruce, 2002. "Peer and social networks in job search," European Economic Review, Elsevier, vol. 46(4-5), pages 870-879, May.
    26. Vega-Redondo,Fernando, 2007. "Complex Social Networks," Cambridge Books, Cambridge University Press, number 9780521857406.
    27. Burks, Stephen V. & Cowgill, Bo & Hoffman, Mitchell & Housman, Michael, 2013. "The Value of Hiring through Referrals," IZA Discussion Papers 7382, Institute of Labor Economics (IZA).
    28. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Post-Print hal-03458567, HAL.
    29. Dale T. Mortensen, 2005. "Wage Dispersion: Why Are Similar Workers Paid Differently?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633191, December.
    30. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    31. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    32. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627, Elsevier.
    33. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2011. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," American Economic Review, American Economic Association, vol. 101(7), pages 2873-2898, December.
    34. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Post-Print hal-03587660, HAL.
    35. Christian Bontemps & Jean-Marc Robin & Gérard van den Berg, 2000. "Equilibrium search with continuous productivity dispersion: theory and nonparametric estimation," Post-Print hal-03416494, HAL.
    36. Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2015. "With a little help from my friends? Quality of social networks, job finding and job match quality," European Economic Review, Elsevier, vol. 78(C), pages 55-75.
    37. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lukas Bolte & Nicole Immorlica & Matthew O. Jackson, 2020. "The Role of Referrals in Immobility, Inequality, and Inefficiency in Labor Markets," Papers 2012.15753, arXiv.org.
    2. Martina Rebien & Michael Stops & Anna Zaharieva, 2020. "Formal Search And Referrals From A Firm'S Perspective," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1679-1748, November.
    3. Benjamin Lester & David A. Rivers & Giorgio Topa, 2021. "The Heterogeneous Impact of Referrals on Labor Market Outcomes," Working Papers 21-34, Federal Reserve Bank of Philadelphia.
    4. Forsythe, Eliza & Wu, Jhih-Chian, 2021. "Explaining Demographic Heterogeneity in Cyclical Unemployment," Labour Economics, Elsevier, vol. 69(C).
    5. Giorgio Topa & Aysegul Sahin & Andreas Mueller & Jason Faberman, 2014. "Job Search Behavior among the Employed and Unemployed," 2014 Meeting Papers 975, Society for Economic Dynamics.
    6. Neugart, Michael & Zaharieva, Anna, 2018. "Social Networks, Promotions, and the Glass-Ceiling Effect," Center for Mathematical Economics Working Papers 601, Center for Mathematical Economics, Bielefeld University.
    7. Bradley, Jake, 2022. "Worker-Firm Screening and the Business Cycle," IZA Discussion Papers 15017, Institute of Labor Economics (IZA).
    8. Jake Bradley, 2020. "Worker-firm screening and the business cycle," Discussion Papers 2020/11, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martina Rebien & Michael Stops & Anna Zaharieva, 2020. "Formal Search And Referrals From A Firm'S Perspective," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1679-1748, November.
    2. Fontaine, François, 2008. "Why are similar workers paid differently? the role of social networks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(12), pages 3960-3977, December.
    3. Stupnytska, Yuliia & Zaharieva, Anna, 2015. "Explaining U-shape of the referral hiring pattern in a search model with heterogeneous workers," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 211-233.
    4. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2011. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," American Economic Review, American Economic Association, vol. 101(7), pages 2873-2898, December.
    5. Pieter A. Gautier & Coen N. Teulings, 2015. "Sorting And The Output Loss Due To Search Frictions," Journal of the European Economic Association, European Economic Association, vol. 13(6), pages 1136-1166, December.
    6. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L, 2006. "Frictional Wage Dispersion in Search Models: A Quantitative Approach," CEPR Discussion Papers 5935, C.E.P.R. Discussion Papers.
    7. Nakajima, Ryo & Tamura, Ryuichi & Hanaki, Nobuyuki, 2010. "The effect of collaboration network on inventors' job match, productivity and tenure," Labour Economics, Elsevier, vol. 17(4), pages 723-734, August.
    8. Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2015. "With a little help from my friends? Quality of social networks, job finding and job match quality," European Economic Review, Elsevier, vol. 78(C), pages 55-75.
    9. Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    10. Carlos Carrillo-Tudela & Eric Smith, 2017. "Search Capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 191-211, January.
    11. Christian Moser & Niklas Engbom, 2016. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," 2016 Meeting Papers 72, Society for Economic Dynamics.
    12. Vejlin, Rune Majlund & Veramendi, Gregory, 2019. "Sufficient Statistics for Frictional Wage Dispersion and Growth," IZA Discussion Papers 12387, Institute of Labor Economics (IZA).
    13. Benjamin Lester & David A. Rivers & Giorgio Topa, 2021. "The Heterogeneous Impact of Referrals on Labor Market Outcomes," Staff Reports 987, Federal Reserve Bank of New York.
    14. Andrea Galeotti & Luca Paolo Merlino, 2014. "Endogenous Job Contact Networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1201-1226, November.
    15. Lukesch, Veronika & Zwick, Thomas, 2021. "Outside options drive wage inequalities in continuing jobs: Evidence from a natural experiment," ZEW Discussion Papers 21-003, ZEW - Leibniz Centre for European Economic Research.
    16. Tomi Kyyrä, 2007. "Estimating Equilibrium Search Models from Finnish Data," Finnish Economic Papers, Finnish Economic Association, vol. 20(2), pages 139-165, Autumn.
    17. Shaimaa Yassin, 2013. "Structural Labor Market Transitions and Wage Dispersion in Egypt and Jordan," Working Papers 753, Economic Research Forum, revised May 2013.
    18. Eckstein, Zwi & van den Berg, Gerard J, 2003. "Empircial labor search models: A survey," Working Paper Series 2003:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    19. Eckstein, Zvi & van den Berg, Gerard J., 2007. "Empirical labor search: A survey," Journal of Econometrics, Elsevier, vol. 136(2), pages 531-564, February.
    20. Nobuhiro Kiyotaki & Ricardo Lagos, 2007. "A Model of Job and Worker Flows," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 770-819, October.

    More about this item

    Keywords

    Labor Markets; Social networks; Job search; Unemployment; Wages dispersion.;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wis:wpaper:1606. 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: . General contact details of provider: https://edirc.repec.org/data/dwindca.html .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Trudeau (email available below). General contact details of provider: https://edirc.repec.org/data/dwindca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.