Virtual Social Currencies for Unemployed People: Social Networks and Job Market Access

Maëlle Della Peruta and Dominique Torre ()

No 2014-16, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: Alternative currencies continue to develop all around the world, taking various forms (material or immaterial) and fulfill various functions. They are created in order to promote the local economy development and to fight against social exclusion. They are principally aimed to low income people (retired or unemployed people, or people who are living with a low wage). In this paper, we analyze the particular case of virtual currency circulation inside a local community of unemployed people. We elaborate on the assumptions that the organization of LETS and the circulation of complementary currencies have two properties: (i) they help unemployed workers to overcome the double coincidence of want necessity of an informal sector founded on barter exchange; (ii) they help to maintain and develop workers' skills outside job, helping them to observe opportunities of employment even as long-term unemployed workers. We study the global properties of a job market associating traditional short-term and long-term unemployment to the organization of LETS. Using a theoretical Pissarides-style model, we find that the initial level of trust of agents in the complementary currency(cies) but also the effective properties of this(these) currency(cies) are crucial for LETS to become permanent institutions. We also find that if the stationary equilibrium of the job-market includes LETS, then LETS have a positive influence on the rate of employment, on the expected utility of employed workers, and are Pareto improving when the benchmark case is a job market without any LETS.

Keywords: Social currencies; complementary currencies; unemployment; informal sector (search for similar items in EconPapers)
JEL-codes: E24 E42 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2014-05
New Economics Papers: this item is included in nep-iue and nep-soc
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Published in International Journal of Community Currency Research, vol.19,pp.31-41.

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Related works:
Working Paper: Virtual social currencies for unemployed people: social networks and job market access (2015)
Working Paper: Virtual social currencies for unemployed people: social networks and job market access (2013)
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