Informal Referrals, Employment, and Wages: Seeking Causal Relationships

Diaz, Ana Maria

doi:10.1111/j.1467-9914.2011.00540.x

Cited by 14 publications

(14 citation statements)

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“…In addition, we show the overall and interval of confidence of the coefficients. The results are in line with Díaz (), showing that most of the wage gap between referred and non‐referred workers is explained by difference in characteristics, but this is not true for the entire wage distribution. Looking at Figure , we can see how in the middle (near the median) of the wage distribution, the wage gap is nearly zero.…”

Section: Empirical Strategy and Resultsmentioning

confidence: 99%

“…Similarly, Banerjee and Bucci (1995) analyze migrants in India. In the Latin American context, specifically the Colombian context, the only work is by Díaz (2012), who finds that individuals who used informal channels were more likely to be employed and earn lower wages than individuals using other job search strategies for the year 2002. However, their study does not account for the network neighborhood or inequality across workers that found jobs through other channels.…”

Section: Introductionmentioning

confidence: 99%

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Job Search Channels, Neighborhood Effects, and Wages Inequality in Developing Countries: The Colombian Case

Nicodemo

García

2015

The Developing Economies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu This paper analyses the relationship between social networks and the job search behaviour of individuals. Networking is not only based on friends and relatives but also on neighbourhood. The geographic closeness is associated to social interactions. Individuals who are in physical and social proximity share the same sources of information, because they divide individual characteristics or because they learn from one another's behaviour. Using data from Colombia in 2009 we explore how neighbourhoods have an effect on the channel used to search for a job (formal vs informal). People tend to opt for a formal or informal channel depending on the channel selected by employed people in their neighbourhood. In addition, we study the wage premium in using a formal or informal channel, exploring the inequality that can arise using a different job search method. Our results show that the neighbourhood affects the individual's job search method and referral workers earn less wage at the bottom of the wage distribution with respect to non-referred workers. At the top of the wage distribution the difference observed is due to different characteristics between the two groups. Colombia presents persistent high levels of informality and inequality. These features impose important social and economic costs such as low tax collection, low employee protection and deficiencies in the labour intermediation process with strong informational asymmetries in the job search. New policies to regulate the labour market are need. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: J64, J31, J24, P23, J6, J7

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Section: Empirical Strategy and Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Job Search Channels, Neighborhood Effects, and Wages Inequality in Developing Countries: The Colombian Case

Nicodemo

García

2015

The Developing Economies

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“…McDonald's (2015) results have the potential to realign theoretical reasoning with empirical results in the field of personal contacts and wages. This potential is particularly important because even more than a decade after Mouw's original analysis, cross-sectional data remain the norm and respective studies often report statistically negative wage effects of personal contacts (Bentolila, Michelacci and Suarez 2010;Chua 2011;Diaz 2012;Franzen and Hangartner 2006;Huang and Western 2011;Pistaferri 1999;Ponzo and Scoppa 2010). Thus, based on the results in McDonald (2015) we might conclude that the negative cross-sectional associations found in the literature are biased by unobserved confounders, and once these are controlled for, the true effect of personal contacts on wages is positive.…”

Section: Motivation For the Replication Studymentioning

confidence: 99%

Will the true causal effect please stand up? A critique of using fixed-effects regression to estimate the effects of personal contacts on wages

Krug¹,

Fuchs²

2019

Preprint

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There is an ongoing controversy about whether the correlation between job finding via personal contacts and wages reflects a causal effect. Critics such as Mouw (2003) argue that controlling for unobserved confounders, preferably by fixed-effects regressions, removes spurious correlations and reveals the actual null effect of personal contacts. More recently, however, McDonald (2015) applied fixed effects regressions and found a significantly positive effect. In this paper, we argue that both the Mouw (2003) and McDonald (2015) results are subject to sample selection. Results are potentially biased because their fixed effects estimators exclude those persons who use only one job search method. We propose difference-in-differences matching as an alternative estimator that does not induce the same sample selection bias. Re-analyzing the data used in Mouw (2003) and McDonald (2015), we find that in both cases, this alternative estimator is unbiased by unobserved confounders as well as by sample selection and gives us a causal null effect, which supports Mouw`s (2003) original argument.

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“…When social networks are mobilized as a job search strategy, there is evidence of both negative and positive effects in terms of wages (e.g., Franzen and Hangartner ; Delattre and Sabatier ; Diaz ). In this paper, we also assume a positive effect of job search via networks in terms of wages (H2b).…”

Section: Social Network Job Finding and Labor Market Outcomes – Thmentioning

confidence: 99%

How to Succeed in a Transnational Labor Market: Job Search and Wages among Hungarian, Slovak, and Czech Commuters in Austria

Verwiebe

Reinprecht

Haindorfer

et al. 2017

International Migration Review

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This paper deals with job search strategies and wages among crossborder commuters residing in the Central European Region (CEN-TROPE). Our main aim is to investigate the role of social networks as constitutive for job searching and for successful labor market integration. We build upon a theoretical framework developed by Aguilera and Massey, reflecting on the nexus of social networks, job search methods, and related labor market outcomes. Methodologically, we use a new quantitative survey on the employment careers of cross-border commuters residing in the regions of the Czech Republic, Slovakia, and Hungary bordering on Austria, conducted in the winter/ spring of 2012/2013 (N = 2,573). Our results corroborate the hypothesis that human and social capital resources as well as labor market characteristics serve as key factors for job search and labor market integration among cross-border commuters in the CEN-TROPE transnational labor market.

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Informal Referrals, Employment, and Wages: Seeking Causal Relationships

Cited by 14 publications

References 37 publications

Job Search Channels, Neighborhood Effects, and Wages Inequality in Developing Countries: The Colombian Case

Job Search Channels, Neighborhood Effects, and Wages Inequality in Developing Countries: The Colombian Case

Will the true causal effect please stand up? A critique of using fixed-effects regression to estimate the effects of personal contacts on wages

How to Succeed in a Transnational Labor Market: Job Search and Wages among Hungarian, Slovak, and Czech Commuters in Austria

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