Job Matching, Social Network and Word-of-Mouth Communication
Antoni Calvó-Armengol and
Yves Zenou
No 695, Seminar Papers from Stockholm University, Institute for International Economic Studies
Abstract:
Workers are embedded within a network of social relationships and can communicate through word-of-mouth. They can find a job through either formal agencies or personal contacts. From this micro scenario, we derive an aggregate matching function that has the standard properties but fails to be homogeneous of degree one. Search frictions arise endogenously because of coordination failures between workers as in the standard urn-ball model. However, contrary to the latter, the network of personal contacts allows here for a (partial) replacement of redundant jobs. Therefore, introducing word-of-mouth communication among network-related individuals reduces co-ordination failures and alleviates the associated search frictions. In particular, when the network size increases, on average, the unemployed workers hear about more vacancies through their social network but, at the same time, it is more likely that multiple vacancies reach the same unemployed worker. Above a certain critical value, this job overcrowding becomes so important that job matches decrease with network size. Finally, we show the existence and uniqueness of the labor market equilibrium and study its properties. In dense enough networks, the corresponding equilibrium unemployment rate increases with network size.
Keywords: coordination failures; microfoundation of the matching function; social network; personal communication (search for similar items in EconPapers)
JEL-codes: D83 J64 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2001-05-22
New Economics Papers: this item is included in nep-ent, nep-lab and nep-net
References: Add references at CitEc
Citations: View citations in EconPapers (15)
Downloads: (external link)
http://su.diva-portal.org/smash/get/diva2:328808/FULLTEXT01 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
Related works:
Journal Article: Job matching, social network and word-of-mouth communication (2005) ![Downloads](/downloads_econpapers.gif)
Working Paper: Job Matching, Social Network and Word-of-Mouth Communication (2003) ![Downloads](/downloads_econpapers.gif)
Working Paper: Job Matching, Social Network and Word-of-Mouth Communication (2001) ![Downloads](/downloads_econpapers.gif)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hhs:iiessp:0695
Access Statistics for this paper
More papers in Seminar Papers from Stockholm University, Institute for International Economic Studies Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Hanna Christiansson (hanna.christiansson@iies.su.se).