Social networks and wages in Senegal s formal sector

Nicoletta Berardi

Working papers from Banque de France

Abstract: We develop a theoretical framework that considers the role played by moral hazard and the diversity of networks and cultures in the choice of hiring channel. In favoritism contexts social networks, and particularly strong ties, are adopted as hiring channels for unskilled jobs and result in wage penalties, while otherwise the opposite happens. We estimate an endogenous switching model for the case of Senegal's manufacturing formal sector and find, consistently with our theoretical predictions in case of favoritism, that informal hiring channels are preferred to fill unskilled vacancies and are associated with a wage penalty, especially when ties are stronger.

Keywords: Social networks; Hiring channel; Wage differential. (search for similar items in EconPapers)
JEL-codes: J31 O12 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2013
New Economics Papers: this item is included in nep-afr, nep-cdm, nep-dev, nep-lab, nep-lma, nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Social networks and wages in Senegal’s labor market (2013)
Working Paper: The Remains of Informality in the Formal Sector: Social Networks and Wages in Senegal's Labor Market (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:429

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