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The impact of social networking on labor market participation

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  • Gergely Horváth
  • Rui Zhang

Abstract

We study the impact of social networks on the workers' labor market participation. We assume that individuals are heterogeneous with respect to the value of home production, which determines who participates in the labor market. Active individuals strategically form social links to obtain job information where the opportunity cost of networking is the value of home production. We find that social networking increases the labor market participation because it raises the probability to find a job. However, the equilibrium level of participation is lower than the socially optimal level. Social networking creates negative externalities, if social policies fix these externalities, the labor market participation rate will increase. Further, we show that when social networking becomes more efficient, the inequality between active individuals increases.

Suggested Citation

  • Gergely Horváth & Rui Zhang, 2022. "The impact of social networking on labor market participation," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 278-290, January.
    • Handle: RePEc:bla:buecrs:v:74:y:2022:i:1:p:278-290
    DOI: 10.1111/boer.12297
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    References listed on IDEAS

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