communication networks in markets abstract this paper proposes and tests experimentally a dynamic model of bargaining to analyze decentralized markets where buyers and sellers obtain information about past deals through their social network there is a unique equilibrium in which every individual obtains the same outcome independent of their network position and this outcome depends on the peripheral least connected individuals in the network the main testable predictions are that networks with high density and or low variability in the number of connections across individuals allow their members to obtain a better deal these predictions are tested in a lab experiment through 4 treatments that vary the network that subjects are assigned to the results of the experiment lend support to the theoretical predictions subjects converge to an outcome that is independent of their network position and they fare better if they are assigned to a network that is dense and or has low variability in number of connections across members

public goods in networks this paper considers incentives to provide goods that are non excludable along social or geographic links we find first that networks can lead to specialization in public good provision in every social network there is an equilibrium where some individuals contribute and others free ride in many networks this extreme is the only outcome second specialization can benefit society as a whole this outcome arises when contributors are linked collectively to many agents finally a new link increases access to public goods but reduces individual incentives to contribute hence overall welfare can be higher when there are holes in a network

are there civic returns to education abstract the hypothesized effects of educational attainment on adult civic engagement and attitudes provide some of the most important justifications for government intervention in the market for education in this study i present evidence on whether these externalities exist i assess and implement two strategies for identifying the effects of educational attainment one is based on the availability of junior and community colleges the other on changes in teen exposure to child labor laws the results suggest that educational attainment has large and statistically significant effects on subsequent voter participation and support for free speech i also find that additional schooling appears to increase the quality of civic knowledge as measured by the frequency of newspaper readership

social networks and the dynamics of labour market outcomes evidence from refugees resettled in the u s recent theoretical work suggests that social networks may play an important role in the dynamics of employment and wages across groups of individuals this paper provides empirical evidence of job information flows within social networks and the non linear relationship between social network size and labor market outcomes an extended version of the model developed by calvo armengol and jackson 2004 shows that competition can exist between network members for job referrals and investigates the dynamics between the size of a social network the tenure of network members and labor market outcomes the predictions of the model are tested empirically using a unique data set of refugees resettled in the u s from 2001 2005 the empirical strategy exploits the special institutional environment of refugee resettlement i find that a one standard deviation increase in the number of network members who have arrived in the u s one year ago lowers the probability of employment by 4 9 and the average hourly wage by 70 conversely as predicted by the model more tenured network members improve labor market outcomes for recently arrived refugees

social and spatial networks in labour markets social connections and referrals are ubiquitous in the labour market both on the job seeker side and on the employer side this article reviews recent developments in the study of referrals highlighting what we have learned regarding the use and impact of referrals on various labour market outcomes and pointing out the increasingly nuanced picture we are gaining on the effects of referrals it then discusses directions for future research emphasizing the importance of using newly available data and combinations of datasets and of making tighter connections with the burgeoning macro labour research that is based on a search and matching framework finally it evaluates the role of referrals from the point of view of policy makers discussing their social welfare implications and ways in which they could be explicitly incorporated into various labour market policies the importance of tighter collaboration between policy makers researchers employers and practitioners is stressed to conduct more rigorous experimentation and evaluation of potential referral based policies and programmes

social network formation and labor market inequality abstract we study how differences in interpersonal skills lead to inequality among workers when social connections are endogenously formed and workers find jobs through their contacts we show that the equilibrium network structure is very unequal in terms of links and access to jobs the equilibrium network is not socially optimal because workers impose negative externality on each other by forming more links the degree of inequality is larger in the equilibrium than what would be socially optimal in the equilibrium high skilled individuals overinvest in networking while low skilled individuals underinvest which enlarges the impact of differences in interpersonal skills the degree of inequality is largest when job availability is moderate

stock market participation and the internet theory indicates that frictions e g information and transaction costs could account for the lower than expected stock market participation rates this paper examines the hypothesis that there has been a fundamental change in participation and links this change to the reduction of these frictions by the advent of the internet using panel data on household participation rates over the past decade the results show computer internet using households raised participation substantially more than non computer using households the increased probability of participation was equivalent to having over 27 000 in additional household income or over two more mean years of education

scale effects in markets with search estimates of aggregate matching functions may miss important scale effects in frictional labour markets because of the reactions of job seekers to scale we estimate a semi structural model of search and matching on a british sample of unemployed people testing for scale effects on the probability of receiving an offer and on the distribution of wage offers we find them only in wage offers but we also find that reservation wages rise to deliver higher post unemployment wages but not faster matches so aggregate matching functions should be unaffected by scale but wage equations should be showing them

the ethnic wage gap and employment differentials in the 1990s evidence for britain abstract it is twenty years since britain passed legislation to combat racial discrimination despite this britain s nonwhite ethnic minorities still appear to face substantial amounts of discrimination in the labour market unemployment is particularly severe

who gets the job referral evidence from a social networks experiment we use recruitment into a laboratory experiment in kolkata india to analyze how job networks select individuals for employment opportunities we present evidence that individuals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network the experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants we find that when faced with performance pay individuals are more likely to refer co workers and less likely to refer family members high ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task

social spillovers in the classroom identification estimation and policy analysis i present a method to jointly estimate social spillovers in the classroom and the distributions of teacher and student effects this method is based on the covariance and higher order moments restrictions of the test scores requiring the random assignment of teachers and students to classrooms using the tennessee project star dataset i estimate sizeable spillovers in kindergarten classrooms and departures from normality of the teacher and student ability distributions the estimates also show that reducing class size has a positive effect on mean performance but it increases the inequality based on these estimates i perform several input neutral policy counterfactuals involving teachers and students assignment rules and changing the distribution of class sizes for the latter i derive an optimal class size distribution rule which increases mean test scores and reduces the overall variance

stockholding behavior of u s households evidence from the 1983 1989 survey of consumer finances most households persistently invest in riskless assets but not stocks and may do so because they perceive information required for market participation to be costly relative to expected benefits in a consumption capital asset pricing model ccapm increased risk aversion income risk and lower resources reduce the information expense sufficient to deter stockholding bivariate probit analysis using the 1983 1989 survey of consumer finances shows that households with lower risk aversion higher education and greater wealth who were nonstockholders in 1983 had an increased conditional probability of entering by 1989 whereas 1983 stockholders with lower resources more limited education and greater risk aversion were more likely to be nonstockholders by 1989

on the empirics of social capital this paper critically examines the way in which empirical evidence is developed in support of a role for social capital in socioeconomic outcomes three leading studies of social capital are reviewed and in each case argued to suffer from various identification problems a general set of conditions under which social capital effects may be identified in linear models is given careful attention to these conditions combined with greater openmindedness as to what constitutes appropriate evidence seems the best route to improving empirical studies of social capital

decision making in the presence of heterogeneous information and social interactions the authors consider the solution of multivariate linear rational expectations models in the presence of heterogeneous information and social interactions to overcome the infinite regress in expectations problem that arises in the solution of these models we assume that agents expectations about the decisions and expectations of other agents are based solely on public information they show that the resulting solutions satisfy the key postulates of the rational expectations hypothesis but can nevertheless exhibit dynamic properties quite different from those under homogeneous information the authors illustrate this by analyzing a model of firms optimal factor demand decisions in this model the presence of information heterogeneity may accentuate the propagation effects of external shocks on firms factor demands copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

life cycle consumption under social interactions abstract in this paper we examine how social interactions affect consumption decisions at various levels of aggregation in a life cycle economy made up of peer groups for this purpose we consider two analytically solvable life cycle models one under certainty equivalent behavior and one under prudence and explicitly allow for three different forms of social interactions in peer groups namely conformism altruism and jealousy we show that whether social interactions have any effects on individuals optimal consumption decisions critically depends on intertemporal rather than static considerations this is true regardless of whether individuals preferences are time separable or exhibit habit formation and whether information within peer groups is homogeneous or disparate it implies that analyzing the effects of social interactions in static rather than intertemporal settings is likely to be misleading we also show that social interactions when coupled with either habit formation or prudence can significantly strengthen the effects of habit formation or prudence in the direction of resolving two well known puzzles in the literature on the permanent income hypothesis namely excess smoothness and excess sensitivity

segregation in friendship networks we analyze a network formation model where agents belong to different communities both individual benefits and costs depend on direct as well as indirect connections benefits of an indirect connection decrease with distance in the network while the cost of a link depends on the type of agents involved two agents from the same community always face a low linking cost while the cost of forming a relationship between two agents from different communities diminishes with the rate of exposure of each of them to the other community we find that socialization among the same type of agent can be weak even if the cost of maintaining links within one s own type is very low our model also suggests that policies aimed at reducing segregation are socially desirable only if they reduce the within community cost differential by a sufficiently large amount

changes in pension incentives through time a common assumption in the compensation and retirement literature often necessitated by lack of data is that company sponsored pensions are static institutions the present paper a study of the pension plans at 14 companies for the years 1960 1970 and 1980 challenges this assumption showing that pension schemes are actually quite dynamic over time specifically the authors find that in 1960 all 14 pension plans tended to reward delayed retirement but by 1980 many of the union plans actively encouraged early retirement nonunion plans in the sample however rewarded deferred retirement in all three years the observed changes in pension incentives may have resulted in part from statutory increases in the age at which workers can be forced to retire by an employer

density social networks and job search methods theory and application to egypt we first develop a theoretical model in which individuals are embedded within a network of social relationships we show that conditional on being employed the probability to find a job through social networks relative to other search methods increases and is concave with the size of the network the effects are stronger for the uneducated there is however a critical size of the network above which this probability decreases we then test empirically these theoretical findings for egypt using the 1998 labor market survey the empirical evidence supports the predictions of our theoretical model

does education improve citizenship evidence from the united states and the united kingdom abstract many studies document an association between schooling and civic participation but none credibly investigate causal links we explore the effect of extra schooling induced through compulsory schooling laws on the likelihood of becoming politically involved in the united states and the united kingdom we find that educational attainment is related to several measures of political interest and involvement in both countries we find a strong and robust relationship between education and voting for the united states but not for the united kingdom our us results approach the uk findings when conditioning on registration possibly indicating that registration rules present a barrier to participation

peer effects in endogenous networks abstract this paper presents a model of strategic network formation with local complementarities in effort levels and positive local externalities results are obtained for a general class of payoff functions which subsumes the linear quadratic specification frequently used in theoretical and applied work we assume homogeneous agents and characterize equilibria for two sided and one sided link formation pairwise nash equilibrium networks are nested split graphs which are a strict subset of core periphery networks we highlight the relevance of the convexity of the value function for obtaining these structures more central agents are shown to exert more effort and obtain higher gross payoffs in equilibrium however net of linking cost central agents may obtain strictly lower net payoffs the curvature of the value function is also important for efficiency considerations these findings are relevant for many social and economic phenomena such as educational attainment criminal activity labor market participation and r d expenditures of firms

the law of the few the law of the few refers to the following empirical phenomenon in social groups a very small subset of individuals invests in collecting information while the rest of the group invests in forming connections with this select few in many instances there are no observable dierences in characteristics between those who invest in information and those who invest in forming connections this paper shows that the law of few naturally emerges in environments with identical rational agents we develop a strategic game in which players have the opportunity to invest in collecting information as well as in investing in bilateral connections with others we find that every strict equilibrium of this game exhibits the law of the few we also show that this pattern of social dierentiations is ecient in some cases

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

the impact of immigration on the structure of wages theory and evidence from britain immigration to the uk particularly among more educated workers has risen appreciably over the past 30 years and as such has raised labor supply however studies of the impact of immigration have failed to find any significant effect on the wages of native born workers in the uk this is potentially puzzling since there is evidence that changes in the supply of educated natives have had significant effects on their wages using a pooled time series of british cross sectional micro data on male wages and employment from the mid 1970s to the mid 2000s this paper offers one possible resolution to this puzzle namely that in the uk natives and foreign born workers are imperfect substitutes we show that immigration has primarily reduced the wages of immigrants and in particular of university educated immigrants with little discernable effect on the wages of the native born

with a little help from my friends quality of social networks job finding and job match quality this paper studies the effect of network quality on job finding and job match quality using longitudinal data and a direct measure of network quality which is based on the employment of friendship ties various identification strategies provide robust evidence that a higher number of employed contacts increases the job finding rate network quality also increases wages for high skilled workers forming networks with non familial contacts instead for low skilled workers more employed familial contacts lead to a negative but not significant effect on wages these findings reconcile previous mixed evidence of network effects on wages indicating heterogeneity by skill level and relationship type

fishing in different pools job search strategies and job finding success in canada in the early 1980s this article examines the job search methods of jobless workers and emphasizes sample selectivity in choice of job search strategies especially use of public employment agencies longitudinal data from the labour force survey of canada for 1981 1983 and 1986 indicate that job search methods change with the business cycle and that many people find jobs without any reported search the determinants of job search success also vary substantially over the business cycle implying a substantial social return to public employment agencies at the 1983 trough of the recession but no noticeable benefits when aggregate unemployment is relatively low

people i know job search and social networks we assess the strength of information spillovers relating unemployment duration of workers displaced by firm closures to their former colleagues current employment status displaced specific networks are recovered from a 20 year panel of matched employer employee data spillovers are identified by comparing performances of codisplaced workers a one standard deviation increase in the network employment rate reduces unemployment duration by about 8 the effect is magnified if contacts recently searched for a job and if their current employer is spatially and technologically closer to the displaced worker stronger ties and lower competition for information favor reemployment several indirect tests exclude other interaction mechanisms

providing health care benefits in retirement this volume highlights many of the special health insurance problems facing the elderly and some of the solutions that the reform process must consider the contributors to this book represent the diverse professions involved in providing health care security to older americans policymaking and academic economists actuaries statisticians physicians employee benefit plan sponsors labor union representatives attorneys and health care policy specialists issues central to the debate are the elderly population s special risk of health problems and its precarious position as health reform proposals unfold the evolving process of reforming our health care system must reflect the politics and economics of retiree health care coverage no other book includes such a diverse cross section of research and opinion about this extremely expensive and valuable benefit providing health care benefits in retirement will be of interest to students scholars and professionals in areas of human resources economics health insurance and employee benefits

occupational mobility and the distribution of occupational success among young men interpretation of the distribution of occupational success depends crucially on an understanding of the process of mobility if the holders of low paying jobs this year are just as likely as anyone else to hold good jobs next year then the lower tail of the earnings distribution is not a matter of great social concern further if the distribution of success is primarily determined by a random process the prospects for a significant reduction in the inequality of earnings are unfavorable on the other hand high mobility in the short run may conceal systematic stratification of the labor force it may be that the same individuals spend most of their time in the worst jobs if so luck and random events may play a small role in the distribution of well being inequality may be a major issue and the elimination of stratification may hold out the promise of an important reduction in inequality simple tabulation of distributions of success and of mobility among categories of success cannot answer the basic question of the role of stratification in this paper we develop a model and statistical method for studying mobility and relating it to characteristics upon which stratification may be based our study rests on annual interviews conducted from 1966 through 1969 with about 3 000 white males born between 1942 and 1952 1 we find that mobility is closely related to personal characteristics especially intelligence and education men with high iqs and extensive education are more likely to move to high paying jobs and are more likely to remain in them nevertheless random events dominate the distribution of occupational success in the short run our results strongly support the finding of christopher jencks and his collaborators that redistribution of the determinants of earnings would do almost nothing to reduce the observed inequality of annual earnings

costly search and recruiting a labor market model with costly search and recruiting is constructed it incorporates many features found in other models and provides new insights into the effects of externalities and transaction costs the model possesses a continuum of equilibria some of which may be pareto ranked with different rates of unemployment despite the multiplicity of equilibria comparative statics results are obtained copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

how children with mental disabilities affect household investment decisions we analyze how children with mental disabilities influence parental portfolio allocation we find that risky asset holding decreases among households with special needs children however conditional on participating in financial markets households with special needs children invest a larger portion of their wealth in risky assets as risky asset holding is a key component of wealth building these findings have important implications for both policy and household wealth inequality

informal job search and black youth unemployment in this paper i analyze how young black and white unemployed jobseekers use various methods of search and the employment outcomes which result from their use the focus is on distinguishing informal search methods i e friends and relatives or direct application without referral from more formal ones in analyzing racial differences the results show that the two informal methods of search account for about 90 of the difference in employment probabilities between white and black youth this also accounts for 57 71 of the difference in unemployment rates between the two furthermore most of these results reflect differences in the ability of these methods to generate job offers as opposed to differences in search effort or job acceptance rates however our ability to explain these differences through personal family and household characteristics was generally quite limited this abstract was borrowed from another version of this item

strong and weak links many of the interesting issues in the economics of networks information transmission individual incentives with local externalities investments in connections and the structure of complex networks have to do with the quality of links between individuals entities however most of the research to date has assumed a one zero formulation of connections i argue that it is possible to write down tractable models of quality of links and that analyzing such models yields fresh insights into these issues jel c72 d85 z13

when to exit a product evidence from the u s motion picture exhibition market when is it optimal for a multi product firm to exit a product we analyze strategic product exit using data on motion pictures exhibition choices in a major metropolitan first run market to estimate the survivor function for films at a given theatre this analysis indicates that a film s survival at a particular theatre is affected by intra firm relative performance and interfirm competitive pressures we find that theatres within chains avoid business stealing preliminary analysis further suggests that theatres compete for market share with neighboring theatres by increasing the time to exit when the competing theatre is owned by a different chain this abstract was borrowed from another version of this item

endogenous job contact networks we use the uk quarterly labour force survey to document the presence of two phenomena first a positive correlation between unemployment rate and the proportion of job seekers who use social networks to nd jobs network use second a non monotone relation between unemployment rate and the proportion of recently employed workers who found their job through friends or relatives network productivity this second relation is positive for low levels of unemployment rate while it becomes negative for high levels of unemployment rate existing models of social networks and labor market generally assume that social networks are exogenous this assumption implies a negative correlation between unemployment rate and network productivity we develop a model where social networks are used to collect job oers but workers decide strategically how much to invest in their network we show that equilibrium job contact networks are dense and more productive in transmitting information when labor market turnover is moderate while they are less productive and segmented into clusters for either high or low turnover the equilibrium response of job contact networks to changes in labor market conditions is sucient to generate

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

micro shocks and aggregate risk the paper presents a micro shock explanation of aggregate risk shocks are independent over agents and equilibria are always unique it is shown that any amount of aggregate risk can be generated by games in which shocks to players are independent explicit examples are given some of which elaborate on examples in the literature implications are drawn for factor analytic methods of extracting aggregate shocks

hiring through referrals abstract an equilibrium search model of the labor market is combined with a social network the key features are that the workers network transmits information about jobs and that wages and firm entry are determined endogenously empirically the inter industry variation in aggregate matching efficiency is attributed to variation in referral use the model predicts that the efficiency of the aggregate matching function is pro cyclical which is consistent with empirical evidence

social networking and individual outcomes beyond the mean field case we study individually optimized continuous outcomes in a dynamic environment in the presence of social interactions and where the interaction topology may be either exogenous and time varying or endogenous the model accommodates more general social effects than those of the mean field type we address endogenous networking by assuming that each individual chooses the weights she attaches to the characteristics and the decisions of other agents this amounts to choosing the elements of a row of a weighted adjacency matrix endogenous social networking thus involves simultaneity between decisions and patterns of directed social interactions

networks in labor markets wage and employment dynamics and inequality we present a model of labor markets that accounts for the social network through which agents hear about jobs we show that both wages and employment are positively associated a strong form of correlation across time and agents we also analyze the decisions of agents regarding staying in the labor market or dropping out if there are costs to staying in the labor market then networks of agents that start with a worse wage status will have higher drop out rates and there will be a persistent differences in wages between groups according to the starting states of their networks

explaining u shape of the referral hiring pattern in a search model with heterogeneous workers this paper presents a search model with heterogeneous workers social networks and endogenous search intensity there are three job search channels costly formal applications and two costless informal channels through family and professional networks our model explains a u shape referral hiring pattern observed in empirical studies and a strong selection of workers on productivity across the three channels moreover combining family and professional referrals into one informal channel may generate a spurious result of wage premiums penalties if high low productivity workers are dominating in the empirical data and their productivity is not fully observable to the econometrician

structural holes in social networks we consider a setting where every pair of players that undertake a transaction e g exchange goods or information creates a unit surplus a transaction can take place only if the players involved have a connection if the connection is direct the two players split the surplus equally while if it is indirect then intermediate players also get an equal share of the surplus thus individuals form links with others to create surplus to gain intermediation rents and to circumvent others who are trying to become intermediary our analysis clarifies the interplay between these forces in the process of strategic network formation first we show that in the absence of capacity constraints on links it leads to the emergence of a star network where a single agent acts as an intermediary for all transactions and enjoys significantly higher payoffs second we study the implications of capacity constraints in the ability of agents to form links in this case distances between players must be long which induces players who are far off to connect in order to avoid paying large intermediation rents a cycle network then emerges payoffs being equal across all players

frictional unemployment on labor flow networks abstract we develop an alternative theory to the aggregate matching function in which workers search for jobs through a network of firms the labor flow network the lack of an edge between two companies indicates the impossibility of labor flows between them due to high frictions in equilibrium firms hiring behavior correlates through the network generating highly disaggregated local unemployment hence aggregation depends on the topology of the network in non trivial ways this theory provides new micro foundations for the beveridge curve wage dispersion and the employer size premium we apply our model to employer employee matched records and find that network topologies with pareto distributed connections cause disproportionately large changes on aggregate unemployment under high labor supply elasticity

social interactions and spillovers the aim of this paper is to provide a tractable model where both socialization or network formation and productive efforts can be analyzed simultaneously this permits a full fledged equilibrium welfare analysis of network formation with endogenous productive efforts and heterogeneous agents we show that there exist two stable interior equilibria which we can pareto rank the socially efficient outcome lies between these two equilibria when the intrinsic returns to production and socialization increase all equilibrium actions decrease at the pareto superior equilibrium while they increase at the pareto inferior equilibrium in both cases the percentage change in socialization effort is higher in absolute value than that of the productive effort

the social multiplier aggregate data is often used to make inferences about individual level behavior if there are social interactions in which one person s actions influence his neighbor s incentives or information then these inferences are inappropriate the presence of positive social interactions or strategic complementarities implies the existence of a social multiplier where aggregate relationships will overstate individual elasticities we present a brief model and then estimate the size of the social multiplier in three areas the impact of education on wages the impact of demographics on crime and group membership among dartmouth roommates in these contexts there is a significant social multiplier jel ho jo co

the implications of labor market network for business cycles we embed a frictional labor market with formal and informal search in an rbc model even in a model with exogenous search effort the interaction between formal and informal network search methods can help in generating more volatility in unemployment

rational expectations equilibria of economies with local interactions abstract we consider general economies in which rational agents interact locally the local aspect of the interactions is designed to represent in a simple abstract way social interactions that is socioeconomic environments in which markets do not mediate all of agents choices which might be in part determined for instance by family peer group or ethnic group effects we study static as well as dynamic infinite horizon economies we allow for economies with incomplete information and we consider jointly global and local interactions to integrate e g global externalities and markets with peer and group effects we provide conditions under which such economies have rational expectations equilibria we illustrate the effects of local interactions when agents are rational by studying in detail the equilibrium properties of a simple economy with quadratic preferences which captures in turn local preferences for conformity habit persistence and preferences for status or adherence to aggregate norms of behavior

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

the effects of social networks on employment and inequality we develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts we show that employment is positively correlated across time and agents moreover unemployment exhibits duration dependence the probability of obtaining a job decreases in the length of time that an agent has been unemployed finally we examine inequality between two groups if staying in the labor market is costly and one group starts with a worse employment status then that group s drop out rate will be higher and their employment prospects will be persistently below that of the other group

a dynamic model of weak and strong ties in the labor market the study develops a simple model where workers can obtain a job through either their strong or weak ties it shows that increasing the time spent with weak ties raises the employment rate of workers it also shows that when the job destruction rate or the job information rate increases workers choose to rely more on their weak ties to find a job the model is extended so unemployed workers can also learn of a vacancy directly from an employer results show that equilibrium employment and time spent with weak ties are sometimes but not in all cases positively related

why do mexican americans earn low wages using current population survey data from november 1979 and 1989 i find that mexican americans earn low wages primarily because they possess less human capital than other workers not because they

competing for attention in social communication markets we investigate the incentives for social communication in the new social media technologies three features of online social communication are represented in the model first new social media platforms allow for increased connectivity i e they enable sending messages to many more receivers for the same fixed cost compared to traditional word of mouth second users contribute content because they derive status or image based utility from being listened to by their peers third we capture the role of social differentiation or how social distance between people affects their preferences for messages in the model agents endogenously decide whether to be a sender of information and then compete for the attention of receivers an important point of this paper is that social communication incentives diminish even as the reach or the span of communication increases as the span of communication increases competition between senders for receiver attention becomes more intense resulting in senders com

networks in the modern economy mexican migrants in the u s labor market this paper attempts to identify job networks among mexican migrants in the u s labor market the empirical analysis uses data on migration patterns and labor market outcomes based on a sample of individuals belonging to multiple origin communities in mexico over a long period of time each community s network is measured by the proportion of the sampled individuals who are located at the destination the united states in any year we verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin community as an instrument for the size of the network at the destination

some contacts are more equal than others informal networks job tenure and wages the explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer an alternative explanation is that workers rely on informal information sources as a last resort such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality this article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts

formal and informal job search i develop a model where workers decide how hard to look for a job via formal and informal search channels the intensity of formal search determines an individual s arrival rate of offers the strength of investment in informal search translates into a job contact network in which job offers are transmitted there are two equilibria one with high formal search and one with high informal search the former pareto dominates the latter