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ENDOGENOUS JOB CONTACT NETWORKS

2014; Wiley; Volume: 55; Issue: 4 Linguagem: Inglês

10.1111/iere.12087

1468-2354

Andrea Galeotti, Luca Paolo Merlino,

Labor market dynamics and wage inequality

International Economic ReviewVolume 55, Issue 4 p. 1201-1226 Original Article ENDOGENOUS JOB CONTACT NETWORKS Andrea Galeotti, Corresponding Author Andrea Galeotti University of Essex, U.K.Please address correspondence to: Andrea Galeotti, Department of Economics, University of Essex, Wivenhoe Park, Colchester, CO4 3SQ, U.K. Phone: +44 (0)1206 874157. Fax: +44 (0) 1206 872724. E-mail: agaleo@essex.ac.uk.Search for more papers by this authorLuca Paolo Merlino, Luca Paolo Merlino University of Vienna, Austria, Université libre de Bruxelles, Belgium We are grateful to the editor, Guido Menzio, and two anonymous referees for many useful suggestions that have substantially improved the article. We have benefited from discussions with Melvyn Coles, Carlos Carrillo-Tudela, and Jordi Massó. Andrea Galeotti is grateful to the European Research Council for support through ERC-starting grant (award no. 283454), to The Leverhulme Trust for support through the Philip Leverhulme Prize and to the UK Economic and Social Research Council for support through the MiSoC research centre (award no. RES-518-285-001). Luca Paolo Merlino is a Postdoctoral Researcher of the Fonds National de la Recherche Scientifique-FNRS and acknowledges financial support from the Universitat Autònoma de Barcelona and the Spanish Ministry of Education and Science through grant SEJ2005-01481/ECON and FEDER, The National Bank of Belgium, ERC through grant 208535, the Wiener Wissenschafts-, Forschungs- und Technologiefonds (WWTF) under project fund MA 09-017, and the FRS-FNRS through grant FC 88878.Search for more papers by this author Andrea Galeotti, Corresponding Author Andrea Galeotti University of Essex, U.K.Please address correspondence to: Andrea Galeotti, Department of Economics, University of Essex, Wivenhoe Park, Colchester, CO4 3SQ, U.K. Phone: +44 (0)1206 874157. Fax: +44 (0) 1206 872724. E-mail: agaleo@essex.ac.uk.Search for more papers by this authorLuca Paolo Merlino, Luca Paolo Merlino University of Vienna, Austria, Université libre de Bruxelles, Belgium We are grateful to the editor, Guido Menzio, and two anonymous referees for many useful suggestions that have substantially improved the article. We have benefited from discussions with Melvyn Coles, Carlos Carrillo-Tudela, and Jordi Massó. Andrea Galeotti is grateful to the European Research Council for support through ERC-starting grant (award no. 283454), to The Leverhulme Trust for support through the Philip Leverhulme Prize and to the UK Economic and Social Research Council for support through the MiSoC research centre (award no. RES-518-285-001). Luca Paolo Merlino is a Postdoctoral Researcher of the Fonds National de la Recherche Scientifique-FNRS and acknowledges financial support from the Universitat Autònoma de Barcelona and the Spanish Ministry of Education and Science through grant SEJ2005-01481/ECON and FEDER, The National Bank of Belgium, ERC through grant 208535, the Wiener Wissenschafts-, Forschungs- und Technologiefonds (WWTF) under project fund MA 09-017, and the FRS-FNRS through grant FC 88878.Search for more papers by this author First published: 28 October 2014 https://doi.org/10.1111/iere.12087Citations: 52 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Abstract We develop a model where workers, anticipating the risk of becoming unemployed, invest in connections in order to access information about available jobs that other workers may have. The investment in connections is high when the job separation rate in the labor market is moderate, whereas it is low for either low or high levels of job separation rate. The equilibrium response of network investment to changes in the labor market conditions generates novel empirical 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, whereas it decreases when the separation rate is high. These predictions are supported by the empirical patterns that we document for the U.K. labor market. Citing Literature Volume55, Issue4November 2014Pages 1201-1226 RelatedInformation