Networks in labor markets: Wage and employment dynamics and inequality

Antoni Calvó-Armengol; Matthew O. Jackson

doi:https://doi.org/10.1016/j.jet.2005.07.007

Networks in labor markets: Wage and employment dynamics and inequality

Antoni Calvó-Armengol, Matthew O. Jackson

Department of Economics and Economic History

Research output: Contribution to journal › Article › Research › peer-review

125 Citations (Scopus)

Abstract

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. © 2005 Elsevier Inc. All rights reserved.

Original language	English
Pages (from-to)	27-46
Journal	Journal of Economic Theory
Volume	132
DOIs	https://doi.org/10.1016/j.jet.2005.07.007
Publication status	Published - 1 Jan 2007

Keywords

Drop-out rates
Employment
Labor markets
Networks
Unemployment
Wage inequality
Wages

UN SDGs

This output contributes to the following Sustainable Development Goal(s)

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AB - 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. © 2005 Elsevier Inc. All rights reserved.

KW - Drop-out rates

KW - Employment

KW - Labor markets

KW - Networks

KW - Unemployment

KW - Wage inequality

KW - Wages

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