How helpful are social networks in finding a job along the economic cycle? Evidence from immigrants in France
|Titre||How helpful are social networks in finding a job along the economic cycle? Evidence from immigrants in France|
|Type de publication||Article|
|Année de publication||2020|
|Titre de la revue||Economic Modelling|
|Auteur(s)||Moreno-Galbis, E., Wolff F-C. et Herault A.|
|Mots-clés||Economic cycle, Immigrant, Network matching rate|
Around 50% of individuals obtain or hear about jobs through social networks. This hiring trend may becomeproblematic when the labor market is tight and people need less social contacts to find a job. Using a one-period static model where network members may receive job offers directly from the firm or indirectly throughemployed members in the network we show that the share of new hires finding a job through social connections(ie network matching rate) decreases with the job finding rate. Using French data for the period 2003–2012, wetest this prediction with immigrants, a population subgroup for whom networks play a major role in occupationaldecisions. We propose two network matching rate indicators, one based on direct recommendations and anotherone internalizing the positive externality on the employment probability induced by peers. We find a decreasingrelationship between the network matching rate and the job finding rate. Social connections are less helpful forfinding jobs during economic expansions.