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Do workers really benefit from their social networks ?

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  • François FONTAINE

    (Université Strasbourg 3, BETA-CNRS and IZA)

Abstract

This paper provides a simple matching model in which unemployed workers and employers can be matched together trough social network or trough more formal methods of search. We show that this crowding-out effect may be socially costly. For that reason, a policy increasing the social capital of the disadvantaged workers can increase the unemployment rate and decrease worker’s output.

Suggested Citation

  • François FONTAINE, 2008. "Do workers really benefit from their social networks ?," Discussion Papers (REL - Recherches Economiques de Louvain) 2008011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2008011
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    File URL: http://sites.uclouvain.be/econ/DP/REL/2008011.pdf
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    Cited by:

    1. Zaharieva, Anna, 2013. "Double Matching: Social Contacts in a Labour Market with On-the-Job Search," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79891, Verein für Socialpolitik / German Economic Association.
    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. Fontaine, Francois, 2007. "A simple matching model with social networks," Economics Letters, Elsevier, vol. 94(3), pages 396-401, March.
    4. Sabatini, Fabio, 2005. "Social capital, labour precariousness and the economic performance. An empirical assessment of the strength of weak ties in Italy," AICCON Working Papers 26-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    5. Zaharieva, Anna, 2013. "Social welfare and wage inequality in search equilibrium with personal contacts," Labour Economics, Elsevier, vol. 23(C), pages 107-121.
    6. 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.
    7. Buhai, I. Sebastian & van der Leij, Marco J., 2023. "A Social Network Analysis of Occupational Segregation," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    8. Trockel, Walter, 2014. "Robustness of intermediate agreements for the discrete Raiffa solution," Games and Economic Behavior, Elsevier, vol. 85(C), pages 32-36.
    9. Duran Miguel A. & Morales Antonio J., 2014. "The Rise and Spread of Favoritism Practices," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 397-414, January.
    10. Zaharieva, Anna, 2015. "Social contacts and referrals in a labor market with on-the-job search," Labour Economics, Elsevier, vol. 32(C), pages 27-43.
    11. Evgeniya Polyakova & Larisa Smirnykh, 2015. "The Impact of Sectoral Segregation on the Earning Differential between Natives and Immigrants in Russia," HSE Working papers WP BRP 110/EC/2015, National Research University Higher School of Economics.
    12. LIU Yang, 2015. "The Role of Individual Social Capital in Wage Determination: Evidence from China," Discussion papers 15133, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    economic policy; matching; social networks; unemployment;
    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
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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