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Friends’ Networks and Job Finding Rates

Lorenzo Cappellari and Konstantinos Tatsiramos ()

No 11/40, Discussion Papers in Economics from Department of Economics, University of Leicester

Abstract: Social interactions are believed to have important consequences for labor market outcomes. Yet the growing literature has been forced to rely on indirect definitions of a network. We present what we believe to be the first evidence that is able to use direct information on the role of close friends. In doing so, we address issues of correlated effects with instrumental variables and panel data. Our estimates suggest that there are large effects from friendship networks, which persist even after controlling for family networks. One additional employed friend increases a person’s job finding probability by approximately 13 percent. This is a result of endogenous social interactions. By testing among alternative mechanisms, our study provides the first evidence that network effects seem to be due to information transmission rather than to social norms or leisure complementarities.

Keywords: Social Interactions; Unemployment; Friendship ties (search for similar items in EconPapers)
JEL-codes: J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-soc and nep-ure
Date: 2011-09
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Working Paper: Friends' Networks and Job Finding Rates (2010) Downloads
Working Paper: Friends’ Networks and Job Finding Rates (2010) Downloads
Working Paper: Friends' Networks and Job Finding Rates (2010) Downloads
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