TY  - GEN
AB  - This paper incorporates job search through personal contacts into an equilibrium matching model with a segregated labour market. Job search in the public
submarket is competitive which is in contrast with the bargaining nature of wages in the informal job market. Moreover, the social capital of unemployed workers
is endogenous depending on the employment status of their contacts. This paper shows that the traditional Hosios (1990) condition continues to hold in an economy
with family contacts but it fails to provide efficiency in an economy with weak ties. This inefficiency is explained by a network externality: weak ties yield higher
wages in the informal submarket than family contacts. Furthermore, the spillovers between the two submarkets imply that wage premiums associated with personal
contacts lead to higher wages paid to unemployed workers with low social capital but the probability to find a job for those workers is below the optimal level.
DA  - 2011
KW  - network formation
KW  - labour economics
LA  - eng
PY  - 2011
SN  - 0931-6558
SP  - 37-
TI  - Social welfare and wage inequality in search equilibrium with personal contacts
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-26717052
Y2  - 2024-11-22T14:03:10
ER  -