This Paper provides a simple matching model in which unemployed workers and employers can be matched together through social networks and through more efficient, but also more costly, methods. In this framework, decentralized decisions to utilize social networks in the job search process can be...

Many workers believe that personal contacts are crucial for obtaining jobs in high-wage sectors. On the other hand, firms in high-wage sectors report using employee referrals because they help provide screening and monitoring of new employees. This Paper develops a matching model that can...

We analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs. This model yields a simple relationship between (i) the unemployment rate, (ii) the value of non-market time, and (iii) the max-mean wage differential. The latter measure of...

To better understand the way social networks operate in the labor market, we propose two simple models where individuals help each other finding a job. In the first one, job information flows between individuals having a link with each other and we show that an equilibrium with a clustering of...

We survey the literatures on the economic consequences of the structure of social networks. We develop a taxonomy of 'macro' and 'micro' characteristics of social inter-action networks and discuss both the theoretical and empirical findings concerning the role of those characteristics in...

The transition from centrally planned to market economy involves a process of massive occupational change that has been largely neglected in the literature. This paper investigates this process using data from the 1995 Estonian Labour Force Survey. We find that between 35 and 50 percent of wage...

The secular rise of European unemployment since the 1960s is hard to explain without reference to structural change. This is especially true in Germany, where industrial employment has declined by more than 30% and service sector employment has more than doubled over the past three decades....

This paper incorporates training in the design of unemployment policies. Human capital falls upon displacement and continuously depreciates during unemployment. While training counters the decrease in human capital, it also affects the willingness of the unemployed to search. I characterize the...

Unemployment insurance systems include monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the effect of sanctions on the ensuing job quality, notably on wage rates and hours worked, and we examine how often a sanction leads to a lower...

In spite of ongoing dramatic changes in labor market structure, transitional economies display rather low worker flows across sectors and occupations. Such low mobility can be explained by low returns to job changes as well as by market segmentation in the allocation of job offers. We develop an...