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A Search Model with a Quasi-Network

Ejarque, João Miguel (2009) A Search Model with a Quasi-Network. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester.

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Abstract

In a standard search model the expected duration of unemployment is independent of the duration of previous employment, as well as of the current length of the unemployment spell. This paper offers a network mechanism to generate these correlations. Here, employed workers invest in social contacts with other employed workers, which will help them find jobs in the event of unemployment. These social contacts "depreciate" because they can also become unemployed and unemployed contacts are assumed to be useless. In this model the longer you have been working, the more contacts you are likely to have, and the more contacts you have the shorter your expected unemployment duration will be. The model is a simple and tractable way of introducing network ideas in one of the workhorses of labour and macroeconomics. The model also suggests that networks are less productive during periods of high unemployment, mainly because high unemployment destroys part of the network. In addition, the model provides guidance for indirect inference of network effects from the data.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Unemployment, Contacts, Duration.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Users 161 not found.
Date Deposited: 28 Aug 2014 11:15
Last Modified: 28 Aug 2014 11:15
URI: http://repository.essex.ac.uk/id/eprint/8932

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