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Distributional effects of hiring through networks

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  • Yoske Igarashi

    (University of Exeter)

Abstract

How would a policy that bans the use of networks in hiring (e.g. anti-old boy network laws) affect welfare? We answer this question in a random search model in which there are two hiring methods, formal costly channels and referral channels, and there are two types of workers, networked workers, who can be hired through both channels, and non-networked workers, who cannot be hired through referrals. We show that the effect of a referral-restricting policy on non-networked workers can be either positive or negative, depending on model parameters. In our calibration such a policy would make non-networked workers slightly worse off and networked workers substantially worse off. (Copyright: Elsevier)

Suggested Citation

  • Yoske Igarashi, 2016. "Distributional effects of hiring through networks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 90-110, April.
    • Handle: RePEc:red:issued:14-50
    DOI: 10.1016/j.red.2016.01.002
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    Cited by:

    1. Schmutte, Ian M., 2016. "Labor markets with endogenous job referral networks: Theory and empirical evidence," Labour Economics, Elsevier, vol. 42(C), pages 30-42.
    2. Youze Lang & Youzhi Yang, 2024. "An Equilibrium Labor Market Model With Internal And External Referrals," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(2), pages 655-692, May.
    3. Yoshitaka Ogisu, 2022. "Referral Hiring and Social Network Structure," Papers 2201.06020, arXiv.org, revised Aug 2022.
    4. Moon, Ji-Woong, 2023. "Strategic referrals and on-the-job search equilibrium," Journal of Monetary Economics, Elsevier, vol. 134(C), pages 135-151.
    5. Anca Elena-Bucea & Frederico Cruz-Jesus & Tiago Oliveira & Pedro Simões Coelho, 2021. "Assessing the Role of Age, Education, Gender and Income on the Digital Divide: Evidence for the European Union," Information Systems Frontiers, Springer, vol. 23(4), pages 1007-1021, August.
    6. Horvath, Gergely & Zhang, Rui, 2018. "Social network formation and labor market inequality," Economics Letters, Elsevier, vol. 166(C), pages 45-49.
    7. Anca Elena-Bucea & Frederico Cruz-Jesus & Tiago Oliveira & Pedro Simões Coelho, 0. "Assessing the Role of Age, Education, Gender and Income on the Digital Divide: Evidence for the European Union," Information Systems Frontiers, Springer, vol. 0, pages 1-15.

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    More about this item

    Keywords

    Random search; Network; Referral; Policy analysis; Welfare; Dynamics;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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