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Title: Do Friends and Relatives Really Help in Getting a Good Job?
Resulting in 1 citation.
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Pellizzari, Michele |
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Do Friends and Relatives Really Help in Getting a Good Job? CEP Discussion Paper 0623, Centre for Economic Performance, London School of Economics, March 2004. Also: http://cep.lse.ac.uk/pubs/download/dp0623.pdf Cohort(s): NLSY79 Publisher: Centre for Economic Performance, London School of Economics & Political Science Keyword(s): Firms; Job Characteristics; Job Search; Social Influences Permission to reprint the abstract has not been received from the publisher. Informal contacts are extensively used by both firms and workers to find jobs and fill vacancies. The common wisdom in the economic literature is that jobs created through this channel are of better quality and pay higher wages than jobs created through formal methods. This paper explores the empirical evidence for European countries using the European Community Household Panel (ECHP) and discovers a large cross-country as well as cross-industry variation in the wage differentials between jobs found through informal and formal methods. Across countries and industries wage premiums and wage penalties to finding jobs through personal contacts are equally frequent. This paper argues that such variation can be explained by looking at firms' recruitment strategies. In labour markets where employers invest largely informal recruitment activities, matches created through this channel are likely to be of average better quality than those created through informal networks. A simple theoretical model is used to show that employers invest more in recruitment for high productivity jobs and for positions that require considerable training. The empirical predictions of the theory are successfully tested using industry-level data on recruitment costs. Data from the US is provided for comparison using the NLS. |
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Bibliography Citation
Pellizzari, Michele. "Do Friends and Relatives Really Help in Getting a Good Job?" CEP Discussion Paper 0623, Centre for Economic Performance, London School of Economics, March 2004. |