Networks in Labor Markets: Wage and Employment Dynamics and Inequality

Antoni Calvó-Armengol (1970-2007) and Matthew Jackson
Authors registered in the RePEc Author Service: Antoni Calvó-Armengol

No 55, Working Papers from Barcelona School of Economics

Abstract: We present a model of labor markets that accounts for the social network through which agents hear about jobs. We show that an improvement in the wage or employment status of either an agent's direct or indirect contacts leads to an increase in the agent's employment probability and expected wages, in the sense of first order stochastic dominance. A similar effect results from an increase in the network contacts of an agent. In terms of dynamics and patterns, we show that both wages and employment are positively associated (a strong form of correlation) across time and agents. We also analyze the decisions of agents regarding staying in the labor market or dropping out. If there are costs to staying in the labor market, and we compare two networks of agents that are identical except that one group starts with a worse wage status, then that group's drop-out rate will be higher that the other's and there will be a persistent difference in wages between the groups.

Keywords: unemployment; wages; networks; labor markets; employment; wage inequality; drop-out rates (search for similar items in EconPapers)
JEL-codes: A14 J31 J64 J70 (search for similar items in EconPapers)
Date: 2015-09
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://bw.bse.eu/wp-content/uploads/2021/05/1255-file.pdf (application/pdf)

Related works:
Journal Article: Networks in labor markets: Wage and employment dynamics and inequality (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:55

Access Statistics for this paper

More papers in Working Papers from Barcelona School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().