The effects of social networks on employment and inequality

Antoni Calvó-Armengol; Matthew O. Jackson

doi:10.1257/0002828041464542

The effects of social networks on employment and inequality

Antoni Calvó-Armengol, Matthew O. Jackson

Department of Economics and Economic History

Research output: Contribution to journal › Review article › Research › peer-review

436 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 language	English
Pages (from-to)	426-454
Journal	American Economic Review
Volume	94
Issue number	3
DOIs	https://doi.org/10.1257/0002828041464542
Publication status	Published - 1 Jun 2004

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