Why are similar workers paid differently? The role of social networks

Francois Fontaine

No 493, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: We provide a matching model where identical workers are embedded in ex-ante identical social networks. Job arrival rate is endogeneous and wages are bargained. We study the evolution of the networks with time and characterize the equilibrium distribution of unemployment rates across networks. We show that wage dispersion arises endogenously as the consequence of the dynamics of networks, firms' strategies and wage bargaining. We show that networks' dynamics, driven by the correlation between agents' statuses, induces unemployment persistence and wages positively correlated with age. Eventually, we show that a higher level of cooperation in networks or larger networks can surprisingly entail more wage dispersio

Keywords: social networks; wage dispersion; matching; unemployment persistence (search for similar items in EconPapers)
JEL-codes: E24 J64 Z13 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-ure
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Citations: View citations in EconPapers (12)

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Journal Article: Why are similar workers paid differently? the role of social networks (2008)
Working Paper: Why are similar workers paid differently ? The role of social networks (2005)
Working Paper: Why Are Similar Workers Paid Differently? The Role of Social Networks (2005)
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