Why are similar workers paid differently? The role of social networks

Francois Fontaine ()

Labor and Demography from EconWPA

Abstract: We provide a matching model where identical workers are embedded in ex- ante identical social networks. Job arrival rate is endogeneous and wages are bargained. We study the evolution of networks with time and characterize the equilibrium distribution of unemployment rates across networks. We emphasize that wage dispersion arises endogenously as the consequence of the dynamics of networks, firms' strategies and wage bargaining. Contrary to a generally accepted idea, social networks do not necessary induce stickiness in unemployment dynamics. Our endogenous matching technology shows that the effects of networks on the dynamics mostly hinge on search externalities and not on the correlation between statuses. Our endogenous framework allow us to quantify these effects.

Keywords: social networks; wage dispersion; matching; unemployment persistence (search for similar items in EconPapers)
JEL-codes: E24 J64 J68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-ure
Date: 2004-08-25, Revised 2005-01-06
Note: Type of Document - pdf; pages: 33
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Related works:
Working Paper: Why are similar workers paid differently? The role of social networks (2004)
Working Paper: Why Are Similar Workers Paid Differently? The Role of Social Networks (2005)
Journal Article: Why are similar workers paid differently? the role of social networks (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpla:0408014

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