Arbeitspapier
Informal versus Formal Search: Which Yields a Better Pay?
Estimates on the effect of job contact method – i.e., informal versus formal search – on wage offers vary considerably across studies, with some of them finding a positive correlation between getting help from informal connections and obtaining high-paying jobs, while others finding a negative one. In this paper, I theoretically investigate the sources of discrepancies in these empirical results. Using a formal job search framework, I derive an equilibrium wage distribution which reveals that the informal search yields for some groups higher and for some others lower wages than formal search. The key result is the existence of nonmonotonicities in wage offers. Two potential sources of these nonmonotonicities exist: (i) peer effects and (ii) unobserved worker heterogeneity in terms of the inherent cost of maintaining connections within a productive informal network. The model predicts that a greater degree of unobserved heterogeneity tilts the estimates toward producing a positive correlation between informal search and higher wages, whereas stronger peer influences tend to yield a negative correlation. This conclusion informs the empirical research in the sense that identification of the true correlation between job contact methods and wage offers requires a careful assessment of the unobserved heterogeneity and peer influences in the relevant sample.
- Sprache
-
Englisch
- Erschienen in
-
Series: IZA Discussion Papers ; No. 9573
- Klassifikation
-
Wirtschaft
Network Formation and Analysis: Theory
Wage Level and Structure; Wage Differentials
Unemployment: Models, Duration, Incidence, and Job Search
- Thema
-
heterogeneity
peer effects
informal networks
job search
nonmonotonicities
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Tumen, Semih
- Ereignis
-
Veröffentlichung
- (wer)
-
Institute for the Study of Labor (IZA)
- (wo)
-
Bonn
- (wann)
-
2015
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Tumen, Semih
- Institute for the Study of Labor (IZA)
Entstanden
- 2015
Ähnliche Objekte (12)
Conventional vs. Organic Agriculture – Which One Promotes Better Yields and Microbial Resilience in Rapidly Changing Climates?
On the Plant which yields the Gum Ammoniacum
The minimum wage, informal pay and tax enforcement
The gender pay gap in informal employment in Poland
Carefree? : Participation and Pay Differentials for Informal Carers in Britain
With potential games, which outcome is better?
Which customers pay? : predicting value pre and post sales
Does vocational education pay better, or worse, than academic education?
Does Vocational Education Pay Better, or Worse, Than Academic Education?
Determining the context and scale at which functional traits increase Nicotiana attenuata yields
Delineation of amplification, hybridization and location effects in microarray data yields better-quality normalization
Auctions vs negotiations in public procurement: Which works better?
Conventional vs. Organic Agriculture – Which One Promotes Better Yields and Microbial Resilience in Rapidly Changing Climates?
On the Plant which yields the Gum Ammoniacum
The minimum wage, informal pay and tax enforcement
The gender pay gap in informal employment in Poland
Carefree? : Participation and Pay Differentials for Informal Carers in Britain
With potential games, which outcome is better?
Which customers pay? : predicting value pre and post sales
Does vocational education pay better, or worse, than academic education?
Does Vocational Education Pay Better, or Worse, Than Academic Education?
Determining the context and scale at which functional traits increase Nicotiana attenuata yields
Delineation of amplification, hybridization and location effects in microarray data yields better-quality normalization
Auctions vs negotiations in public procurement: Which works better?
Conventional vs. Organic Agriculture – Which One Promotes Better Yields and Microbial Resilience in Rapidly Changing Climates?
On the Plant which yields the Gum Ammoniacum
The minimum wage, informal pay and tax enforcement
The gender pay gap in informal employment in Poland
Carefree? : Participation and Pay Differentials for Informal Carers in Britain
With potential games, which outcome is better?
Which customers pay? : predicting value pre and post sales
Does vocational education pay better, or worse, than academic education?
Does Vocational Education Pay Better, or Worse, Than Academic Education?
Determining the context and scale at which functional traits increase Nicotiana attenuata yields
Delineation of amplification, hybridization and location effects in microarray data yields better-quality normalization