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

Abstract

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Wage Dynamics and Peer Referrals

“…Calvó-Armengol & Zenou (2005), Cahuc & Fontaine (2009) and Fontaine (2008)) by extending the results of Calvó-Armengol & Jackson (2004, 2007. Specifically, we show that a natural extension of their results holds outside the stationary distribution, and under observed and unobserved heterogeneity.…”

“…For example, it is estimated that between 18% and 45% of jobs are found using personal contacts (Pellizzari, 2010). A significant portion of wage inequality between different groups, and the persistence of this inequality, may be due to differences in the composition of social networks (Ioannides & Soetevent, 2006;Fontaine, 2008). Understanding non-market forces governing employment and wages has been a preoccupation for economists, going back to Rees (1966), Granovetter (1973Granovetter ( , 1983 and Montgomery (1991Montgomery ( , 1992.…”

With a little help from my friends? Quality of social networks, job finding and job match quality

“…The theoretical framework we adopt to motivate our empirical analysis is based on the role of social networks in reducing search frictions by spreading information about job opportunities (e.g. Calvó-Armengol, 2004;Calvó-Armengol and Jackson, 2004;Calvó-Armengol and Zenou, 2005;Ioannides and Soetevent, 2006;Fontaine, 2008;Cahuc and Fontaine, 2009;Bramoullé and Saint-Paul, 2009;Galeotti and Merlino, 2014). 1 In this framework, both employed and unemployed workers receive information randomly about job vacancies, and each individual is connected with others within a network.…”

“…Fontaine, 2008). However, if workers are heterogeneous in their skills, and jobs differ in the type of skills they require, mismatch may arise when employed contacts transmit opportunities about jobs which require different skills from the ones the unemployed possess (e.g.…”

“…Recent theoretical studies have focused on the employment status of network members as the relevant measure of network quality for understanding the effectiveness of social contacts as a job search channel (e.g. Calvó-Armengol and Jackson, 2004;Fontaine, 2008;Galeotti and Merlino, 2014). The main insight from this literature is that a higher employment rate within the network of social contacts increases the chances of a successful job match for non-employed network members through the transmission of information about job opportunities.…”