Do workers really benefit from their social networks?

Francois Fontaine ()

Macroeconomics from EconWPA

Abstract: This paper provides a simple matching model in which unemployed workers and employers in large firms can be matched together through social networks or through more "formal" methods of search. We show that networks do not necessarily add new externalities and that some results previously obtained in the literature are questionable. Nevertheless, social networks can, in some case, substitute for labor market and this crowding-out effect may be socially costly. We show that a policy increasing the number of workers embedded in the social networks can increase the unemployment rate and decrease workers welfare. Since it is mostly the firms which benefit from larger social networks, transfers from the firms to the workers are necessary to make larger access to the social networks efficient.

Keywords: social networks; labor market; matching; unemployment; economic policy (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, nep-net and nep-ure
Date: 2003-11-06, Revised 2004-08-26
Note: Type of Document - pdf; prepared on Win2000; pages: 30; figures: Yes (included)
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http://129.3.20.41/eps/mac/papers/0311/0311002.pdf (application/pdf)

Related works:
Working Paper: Do workers really benefit from their social networks? (2004)
Working Paper: Do Workers Really Benefit From Their Social Networks? (2004)
Journal Article: Do workers really benefit from their social networks? (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0311002

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