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American Economic Review: Vol. 94 No. 3 (June 2004)
AER Volume. 94, Issue 3 | 
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The Effects of Social Networks on Employment and Inequality
Article Citation
Calvó-Armengol, Antoni, and
Matthew O. Jackson. 2004. "The Effects of Social Networks on Employment and Inequality."
The American Economic Review,
94(3): 426-454.
DOI: 10.1257/0002828041464542
DOI: 10.1257/0002828041464542
Abstract
We develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts. We show that employment is positively correlated across time and agents. Moreover, unemployment exhibits duration dependence: the probability of obtaining a job decreases in the length of time that an agent has been unemployed. Finally, we examine inequality between two groups. If staying in the labor market is costly and one group starts with a worse employment status, then that group's drop-out rate will be higher and their employment prospects will be persistently below that of the other group.
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Authors
Calvó-Armengol, Antoni
Jackson, Matthew O.
Jackson, Matthew O.
