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Getting a Job through Unemployed Friends: A Social Network Perspective

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  • Zhang Rui

    (International School of Economics and Management, Capital University of Economics and Business, 100070Beijing, China)

Abstract

We develop a model in which unemployed workers can pass along unwanted job information to other unemployed friends within social networks. Compared with the case in the absence of social networks, we first show in an economy where networks are equal in size that unemployment rate is lower. In terms of social welfare, social planner prefers workers becoming more selective than the decentralized equilibrium. When social networks differ in size, increasing the size difference is beneficial for unemployed workers with large networks but detrimental to those with small networks; in addition, the unemployment rate decreases with the size difference. However, because of the dilution effect, as the proportion of unemployed workers with large networks increases, it eventually results in losses for all unemployed workers, and the unemployment rate may follow a non-monotonic pattern.

Suggested Citation

  • Zhang Rui, 2017. "Getting a Job through Unemployed Friends: A Social Network Perspective," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 17(2), pages 1-20, June.
    • Handle: RePEc:bpj:bejtec:v:17:y:2017:i:2:p:20:n:6
    DOI: 10.1515/bejte-2016-0055
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    disutility; selectivity; social network;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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