Endogenous job contact networks

Publication type

ISER Working Paper Series

Series Number

2010-14

Series

ISER Working Paper Series

Authors

Publication date

May 4, 2010

Abstract:

We develop a model where workers, anticipating the possibility of unemployment, invest in connections to access information about available jobs. The investment in connections is high when the job separation rate is moderate, otherwise the investment in connections is low. The response of network investment to labor market conditions generates novel 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, and it decreases otherwise. These predictions are supported by the empirical patterns which we document for the UK labor market.

Subjects

Notes

working paper


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