Social Networks, Job Search Methods and Reservation Wages: Evidence for Germany

Marco Caliendo, Ricarda Schmidl and Arne Uhlendorff

No 1055, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: In this paper we analyze the relationship between social networks and the job search behavior of unemployed individuals. It is believed that networks convey useful information in the job search process such that individuals with larger networks should experience a higher productivity of informal search. Hence, job search theory suggests that individuals with larger networks use informal search channels more often and substitute from formal to informal search. Due to the increase in search productivity, it is also likely that individuals set higher reservation wages. We analyze these relations using a novel data set of unemployed individuals in Germany containing extensive information on job search behavior and direct measures for the social network of individuals. Our findings confirm theoretical expectations. Individuals with larger networks use informal search channels more often and shift from formal to informal search. We find that informal search is mainly considered a substitute for passive, less cost intensive search channels. In addition to that, we find evidence for a positive relationship between the network size and reservation wages.

Keywords: job search behavior; unemployment; social networks (search for similar items in EconPapers)
JEL-codes: J64 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2010
New Economics Papers: this item is included in nep-lab, nep-ltv, nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Social networks, job search methods and reservation wages: evidence for Germany (2011)
Working Paper: Social Networks, Job Search Methods and Reservation Wages: Evidence for Germany (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp1055

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