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How do social networks affect labor markets?

Ian Schmutte

IZA World of Labor, 2016, No 304, 304

Abstract: Social networks, or “job-referral” networks, can help make labor markets become more efficient. Outside the firm, they help workers obtain employment after displacement and secure higher-paying jobs. They can also match highly-skilled workers to more productive employment. Inside the firm, referrals facilitate employment relationships that are more stable, productive, and profitable. In aggregate, referral networks help “grease the wheels” of a labor market that can be beset by a range of information problems. However, such networks can also be segmented along racial, ethnic, and socio-economic lines, which brings into question the effect they may have on inequality between and within different groups of workers.

Keywords: referral networks; wages; unemployment; inequality; social interactions (search for similar items in EconPapers)
JEL-codes: D85 E24 J01 J31 J42 J62 (search for similar items in EconPapers)
Date: 2016
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