The effects of social networks on employment and inequality

Antoni Calvó-Armengol, Matthew O. Jackson

Research output: Contribution to journalReview articleResearchpeer-review

418 Citations (Scopus)

Abstract

We develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts. We show that employment is positively correlated across time and agents. Moreover, unemployment exhibits duration dependence: the probability of obtaining a job decreases in the length of time that an agent has been unemployed. Finally, we examine inequality between two groups. If staying in the labor market is costly and one group starts with a worse employment status, then that group's drop-out rate will be higher and their employment prospects will be persistently below that of the other group.
Original languageEnglish
Pages (from-to)426-454
JournalAmerican Economic Review
Volume94
Issue number3
DOIs
Publication statusPublished - 1 Jun 2004

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