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Networks in labor markets:Wage and employment dynamics and inequality

Calvó-Armengol, Antoni and Jackson, Matthew O. (2007) Networks in labor markets:Wage and employment dynamics and inequality. Journal of Economic Theory, 132 (1). pp. 27-46. ISSN 0022-0531. doi:10.1016/j.jet.2005.07.007.

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We present a model of labor markets that accounts for the social network through which agents hear about jobs.We showthat bothwages 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.

Item Type:Article
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URLURL TypeDescription ItemEarlier version published as Social Science Working Paper 1213
Jackson, Matthew O.0000-0001-9846-4249
Additional Information:© 2005 Published by Elsevier Inc. Received 21 June 2004; final version received 26 July 2005; Available online 7 October 2005 This paper was formerly part of Calvó-Armengol and Jackson (2004). That paper was split into two parts, with the part under the former title looking at a special case of the networks outlined here and focusing on employment dynamics, and this part looking at a more general set of networks and exploring both wage and employment dynamics. Formerly SSWP 1213.
Subject Keywords:Networks; Labor markets; Employment; Unemployment;Wages;Wage inequality; Drop-out rates
Issue or Number:1
Classification Code:JEL: D85; A14; J64; J31; J70; L14
Record Number:CaltechAUTHORS:20171103-143713962
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82947
Deposited By: Jacquelyn Bussone
Deposited On:07 Nov 2017 18:21
Last Modified:15 Nov 2021 19:54

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