Job matching, social network and word-of-mouth communication

Antoni Calvó-Armengol, Yves Zenou

Research output: Contribution to journalArticleResearchpeer-review

95 Citations (Scopus)

Abstract

Workers can find a job either directly or through personal contacts. From this micro scenario, we derive an aggregate matching function that has the standard properties but fails to be homogeneous of degree one. We show that, when the network size increases, on average, the unemployed workers hear about more vacancies through their social network. However, above a certain critical value, job matches decrease with network size. We then establish existence and uniqueness of the labor market equilibrium and study its properties. Finally, we demonstrate that the decentralized market equilibrium is not efficient because of both search and network externalities.

Original languageEnglish
Pages (from-to)500-522
Number of pages23
JournalJournal of Urban Economics
Volume57
Issue number3
DOIs
Publication statusPublished - 1 May 2005
Externally publishedYes

Keywords

  • Coordination failures
  • Personal communication
  • Social network

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