Do Workers Really Benefit From Their Social Networks?

Francois Fontaine

No 1282, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides a simple matching model in which unemployed workers and employers in large firms can be matched together through social networks or through more "formal" methods of search. We show that networks do not necessarily add new externalities and that some results previously obtained in the literature are questionable. Nevertheless, social networks can, in some case, substitute for labor market and this crowding-out effect may be socially costly. We show that a policy increasing the number of workers embedded in the social networks can increase the unemployment rate and decrease workers welfare. Since it is mostly the firms which benefit from larger social networks, transfers from the firms to the workers are necessary to make larger access to the social networks efficient.

Keywords: economic policy; matching; social networks; unemployment (search for similar items in EconPapers)
JEL-codes: E24 J64 J68 Z13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2004-09
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 (12)

Published - published in: Recherches Économique de Louvain / Louvan Economic Reivew, 2008, 74 (1), 5-31

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Related works:
Working Paper: Do workers really benefit from their social networks ? (2008)
Working Paper: Do Workers really benefit from their social networks ? (2005)
Working Paper: Do workers really benefit from their social networks? (2004)
Working Paper: Do workers really benefit from their social networks? (2004)
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