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Calvo-Armengol, A., Jackson, M. O. (2004). The Effects of Social Networks on Employment and Inequality. American Economic Review 94(3): 426-454

We develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts. We show that employment is positively correlated across time and agents. Moreover, unemployment exhibits duration dependence: the probability of obtaining a job decreases in the length of time that an agent has been unemployed. Finally, we examine inequality between two groups. If staying in the labor market is costly and one group starts with a worse employment status, then that group's drop-out rate will be higher and their employment prospects will be persistently below that of the other group.

Authors

Jackson, Matthew O.

Matthew O. Jackson is the William D. Eberle Professor of Economics at Stanford University, an external faculty member of the Santa Fe Institute, and a fellow of CIFAR. He received his Ph.D. from Stanford University in 1988.

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