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Title: Social Interactions and the Labor Market

Author(s): Yves Zenou

Publication Date: October 2012

Keyword(s): dyads, homophily, social interactions and weak and strong ties

Programme Area(s): Labour Economics

Abstract: To better understand the way social networks operate in the labor market, we propose two simple models where individuals help each other finding a job. In the first one, job information flows between individuals having a link with each other and we show that an equilibrium with a clustering of workers with the same status is likely to emerge since, in the long run, employed workers tend to be friends with employed workers. In the second model, individuals interact with both strong and weak ties and decide how much time they spend with each of them. As in Granovetter, this model stresses the strength of weak ties in finding a job because they involve a secondary ring of acquaintances who have contacts with networks outside ego's network and therefore offer new sources of information on job opportunities. We then discuss some policy implications showing how these models can explain why ethnic minorities tend to experience higher unemployment rate than workers from the majority group.

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Bibliographic Reference

Zenou, Y. 2012. 'Social Interactions and the Labor Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9180