Social Networks in Labor Markets

Research in sociology and economics point to important role for social networks in labor markets. Social contacts mediate propagation of rich and reliable information among indi- viduals and thus help workers find jobs and employers find employees. Recent theoretical advances show that for agents connected through networks employment is positively cor- related across time and agents, unemployment exhibits duration dependence, and inequal- ity can persist. Recent empirical findings underscore nonlinearities in social interactions and potentially important effects of self-selection. Socioeconomic characteristics can explain substantial spatial dependence in unemployment.