Social Capital and Wages: An Econometric Evaluation of Social Networking's Effects

Abstract

The goal of this paper is to get an econometric evaluation of the effects of the social network's mobilization, as a job search strategy, on wages. We make use of switching regression models to deal simultaneously with an endogenous selection issue in the network's choice and the existence of two different regimes of wage determination. Econometric estimates provide evidence for the existence of a selection effect on the choice of network but, after correcting the selection bias on the wage equations, the effect of social network on wages is negative. Copyright 2007 The Authors; Journal compilation 2007 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd..

Asymmetric Information in a Search Model with Social Contacts

“…8 Bentolila, Michelacci and Suarez (2010) report wage penalties in the United States and the European Union. This result is supported by Delattre and Sabatier (2007), Pistaferri (1999) as well as Addison and Portugal (2002) for France, Italy and Portugal respectively. types is increasing slower than that of high types is decreasing.…”

Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector

“…In contrast with these early theoretical predictions, with few exceptions relative mainly to Anglo-Saxon countries and high skill labour markets (Simon and Warner, 1992;Kugler, 2003;Goos and Salomons, 2007), the available empirical evidence concurs to reach the conclusion that the wage effect of informal channels is neither positive nor constant across sectors and countries 3 (see, among others, Pistaferri, 1999;Pellizzari, 2004;Bentolila, Michelacci and Suarez, 2004;Meliciani and Radicchia, 2005;Antoninis, 2006;Delattre and Sabatier, 2007;Weber and Mahringer, 2007;Pastore, 2008).…”

“…Their coefficient moves from around zero to -0.18, but remains statistically insignificant. Delattre and Sabatier (2007) find no effect at all of informal networks on wages using both OLS and IV estimates.…”

“…In these markets, informal networks represent a negative, not a positive signal for employers. This does not need to mean, though, that referrals are only due to unobserved job characteristics that might cause compensating wage differentials as one might argue based on a reverse causality hypothesis (Pistaferri, 1999;Delattre and Sabatier, 2007).…”

Social welfare and wage inequality in search equilibrium with personal contacts

“…(p. 1). However when the distinction between relatives and friends is explicit family ties tend to have a negative effect on wages (see Sylos Labini (2004), Delattre and Sabatier (2007), Kramarz and Nordstrom Skans (2010)). …”