ENDOGENOUS JOB CONTACT NETWORKS

Andrea Galeotti and Luca Merlino

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Abstract: We develop a model where workers, anticipating the risk of becoming unemployed, invest in connections in order to access information about available jobs that other workers may have. The investment in connections is high when the job separation rate in the labor market is moderate, whereas it is low for either low or high levels of job separation rate. The equilibrium response of network investment to changes in the labor market conditions generates novel empirical predictions. In particular, the probability that a worker finds a new job via his connections increases in the separation rate when the separation rate is low, whereas it decreases when the separation rate is high. These predictions are supported by the empirical patterns that we document for the U.K. labor market.

Keywords: Unemployment; Job Search; Networks; Labor Market (search for similar items in EconPapers)
Date: 2014-11
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Citations: View citations in EconPapers (40)

Published in International Economic Review, 2014, 55 (4), ⟨10.1111/iere.12087⟩

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Related works:
Journal Article: ENDOGENOUS JOB CONTACT NETWORKS (2014)
Working Paper: Endogenous job contact networks (2010)
Working Paper: Endogenous Job Contact Networks (2010)
Working Paper: Endogenous job contact networks (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01263754

DOI: 10.1111/iere.12087

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