Social Contacts and Occupational Choice

Samuel Bentolila, Javier Suarez and Claudio Michelacci ()

No 4308, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Social contacts help workers to find jobs, but those jobs need not be in the occupations where workers are most productive. Hence social contacts can generate mismatch between a worker?s occupational choice and their comparative productive advantage. Thus economies with dense social networks can exhibit apparently low labour force quality and, as a result, low returns to firms? investment and depressed aggregate productivity. We employ US and European data for the 1990?s to test the key prediction that social contacts distort workers? occupational choices in a direction that reduces their apparent productivity. We find that the use of social contacts helps find jobs one to two months sooner but leads to individual wage discounts of 5% to 7% and produces negative externalities on aggregate productivity.

Keywords: Search; Mismatch; Occupational mobility (search for similar items in EconPapers)
JEL-codes: J24 J41 O15 (search for similar items in EconPapers)
Date: 2004-03
New Economics Papers: this item is included in nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Journal Article: Social Contacts and Occupational Choice (2010)
Working Paper: Social Contacts and Occupational Choice (2004)
Working Paper: Social Contacts and Occupational Choice (2004)
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