Do Workers Really Benefit from Their Social Networks?

Fontaine, François

Do Workers Really Benefit from Their Social Networks? - 2008.


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This paper presents a simple matching model in which unemployed workers and employers can be matched together through social networks or through more “formal” search methods. We will show that in some cases, networks become substitutes for the labor market and that this substitution may be socially costly. For this reason, a policy that aims to enhance the social capital of disadvantaged workers may increase the unemployment rate and decrease workers’ well-being.

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