Hiring through referrals

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An equilibrium search model of the labor market is combined with a social network. The key features are that the workers' network transmits information about jobs and that wages and firm entry are determined endogenously. Empirically, the inter-industry variation in aggregate matching efficiency is attributed to the variation in referral use. The model predicts that the efficiency of the aggregate matching function is pro-cyclical which is consistent with empirical evidence.
Original languageEnglish
Pages (from-to)304-323
Number of pages20
JournalJournal of Economic Theory
Early online date27 Mar 2014
Publication statusPublished - Jul 2014

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