Three Essays on Social Networks in Labor Markets
McEntarfer, Erika L.
MetadataShow full item record
This dissertation consists of three essays examining the important role of job connections, references, and word of mouth information in labor markets. The first essay examines the importance of job connections for internal migrants. In this chapter, I develop a theoretical model where labor market networks provide labor market information with less noise than information obtained in the formal market. This model predicts lower initial wages and greater wage growth after migration for migrants without contacts. I then use data from the National Longitudinal Study of Youth (NLSY) to examine whether migrants who used social connections when finding their first job assimilate faster in the new region. Consistent with the theoretical model, I find that migrants who did not use social connections take longer to assimilate in the new region. The second essay models how screening workers through social networks impacts labor mobility in markets with adverse selection. When there is asymmetric information in labor markets, worker mobility is constrained by adverse selection in the market for experienced workers. However, if workers can acquire references through their social networks then they can move more easily between jobs. In this chapter I develop a simple labor market model in which workers can learn the productivity of other workers through social interaction. I show that networks increase wages and mobility of high-productivity experienced workers; however, networks discourage workers from accepting jobs outside their job-contact network, because of adverse selection. The third essay in this dissertation examines the importance of social networks in labor markets when work is produced jointly. Most employers cite poor attitude and poor fit with firm culture as their greatest problems in recruiting employees, rating these factors more important than skill. This is easily explained when the output of the firm requires that workers engage in work together. In this essay, I explain why it might be rational for firms to hire through social networks even when worker skill is observed perfectly, if these workers are better able to do joint work with the firm s existing employees.
- Doctoral Dissertations