Asymmetric information in a search model with social contacts

Arbeitspapier

In this paper, the search model is proposed, in which homogeneous firms are uncertain about the job seekers' number of friends, who can help them in the job search (social capital). All workers have the same productivity and differ only in the social capital. A firm offers a take-it-or-leave-it wage contract to a worker after checking the worker's profile and her public number of non-fictitious social contracts in the Social Network System in the Internet. This number serves as a noisy signal of the social capital for firms and cannot be influenced by the worker only for signalling purpose. The model generates a positive relationship between the number of contacts in the Social Network System and the wage offered by firms in the equilibrium. In addition, the presence of firm's uncertainty with respect to workers' possibilities to find jobs through social contacts increases overall social welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Center for Mathematical Economics Working Papers ; No. 548

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Wage Level and Structure; Wage Differentials ; Wages, Compensation, and Labor Costs: Public Policy ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: social capital ; asymmetric information ; uncertainty ; Social Network System ; Facebook ; Linkedin ; wage contract ; wage dispersion ; social welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stupnytska, Yuliia
• Event: Veröffentlichung
• (who): Bielefeld University, Center for Mathematical Economics (IMW)
• (where): Bielefeld
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/149005
• URN: urn:nbn:de:0070-pub-27856526
• Last update: 10.03.2025, 11:42 AM CET