Publication: The Temptation of Social Networks under Job Search Frictions
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Published
2025-02-07
ISSN
0258-6770
Date
2025-02-07
Author(s)
Matsuda, Norihiko
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Abstract
This paper presents descriptive evidence that although social networks help find jobs, the jobs found through social networks tend to be mismatched. The paper uses nationally representative matched employer-employee data in Bangladesh that includes direct measures of match quality. Less educated and seemingly poorer workers are more likely to have found their jobs through social networks. Compared to workers at the same occupation level in the same firm who were matched through formal channels, those matched through social networks found their jobs quicker but had lower match quality and earned less. The mechanism, suggested by a theoretical model, is as follows: even when social networks are connected to mismatched jobs, workers can be tempted to use social networks to find mismatched jobs for fear of finding nothing. This temptation is more potent for less skilled and poorer workers because costly formal channels are less rewarding and affordable for them.
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“Matsuda, Norihiko; Nomura, Shinsaku. 2025. The Temptation of Social Networks under Job Search Frictions. World Bank Economic Review. © World Bank. http://hdl.handle.net/10986/42777 License: CC BY 3.0 IGO.”
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World Bank Economic Review
1564-698X
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