Abstract
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 language | English |
|---|---|
| Pages (from-to) | 304-323 |
| Number of pages | 20 |
| Journal | Journal of Economic Theory |
| Volume | 152 |
| Early online date | 27 Mar 2014 |
| DOIs | |
| Publication status | Published - Jul 2014 |