Social networks and unraveling in labor markets

Itay Fainmesser ()

Journal of Economic Theory, 2013, vol. 148, issue 1, 64-103

Abstract: This paper studies the phenomenon of early hiring in entry-level labor markets affected by social networks. We offer a model in which information is revealed over time. At first, workers have noisy information about their own ability. The early information is ‘soft’ and non-verifiable, and workers can convey the information credibly only to firms that are connected to them. Later on, ‘hard’ accurate verifiable information becomes available. We characterize the effects of changes to the network structure on the unraveling of the market towards early hiring. Moreover, we show that an efficient design of the matching procedure can prevent unraveling.

Keywords: Networks; Unraveling; Entry-level labor markets; Early hiring (search for similar items in EconPapers)
JEL-codes: A14 C78 D85 L14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Social Networks and Unraveling in Labor Markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:148:y:2013:i:1:p:64-103

DOI: 10.1016/j.jet.2012.12.016

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