Publication: Fast, Easy and Cheap Job Matching: Social Networks in Bangladesh
Abstract
This paper uncovers the reason why
social networks are used in a job market. The data are
novel: a nationally representative matched employer-employee
data set in Bangladesh with detailed information, including
direct measures of the use of social networks. The empirical
analysis shows that compared with those who used open
channels to find jobs, the employees who used social
networks found jobs more easily, have lower observable
abilities, and achieved lower employment outcomes
conditional on observable and unobservable abilities. These
results are robust whether firm-occupation fixed effects are
controlled for or not. By comparing these findings with
theoretical predictions, the paper concludes that social
networks play the role as fast and easy but narrow-spectrum
matching. That is, social networks allow job seekers to find
jobs quickly and easily and thereby reduce search costs, but
the types of jobs available from social networks are
narrower than those from open channels. As a consequence,
those who choose to use social networks are more likely to
end up having mismatched jobs, that is jobs in which they
cannot take advantage of their specialties. In the context
of developing countries, a considerable number of poor job
seekers may use social networks out of necessity even if the
returns to finding good-match jobs through open channels are
sufficiently high.
Link to Data Set
Citation
“Matsuda, Norihiko; Nomura, Shinsaku. 2017. Fast, Easy and Cheap Job Matching: Social Networks in Bangladesh. Policy Research Working Paper;No. 8107. © World Bank, Washington, DC. http://hdl.handle.net/10986/27307 License: CC BY 3.0 IGO.”
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