A large body of literature considers the advantages of using informal networks to match workers to jobs. However, family ties may interfere with a genuine process of worker selection, favoring people with connections over more talented workers. We offer a simple model of favoritism to explain these risks and show firms’ trade-off in using informal channels. We then investigate empirically the determinants and consequences of using informal networks in Italy by using the Bank of Italy Survey. We find that informal networks tend to be used by low-educated individuals, in small firms, in low-productivity jobs and in less developed regions. Finally, we show that informal networks have a negative impact on wages, controlling for individual and firm characteristics.

The Use of Informal Networks in Italian Labor Markets: Efficiency or Favoritisms? / Ponzo, Michela; Scoppa, V.. - In: JOURNAL OF SOCIO-ECONOMICS. - ISSN 1053-5357. - ELETTRONICO. - 39:1(2010), pp. 89-99. [10.1016/j.socec.2009.07.007]

The Use of Informal Networks in Italian Labor Markets: Efficiency or Favoritisms?

PONZO, Michela;
2010

Abstract

A large body of literature considers the advantages of using informal networks to match workers to jobs. However, family ties may interfere with a genuine process of worker selection, favoring people with connections over more talented workers. We offer a simple model of favoritism to explain these risks and show firms’ trade-off in using informal channels. We then investigate empirically the determinants and consequences of using informal networks in Italy by using the Bank of Italy Survey. We find that informal networks tend to be used by low-educated individuals, in small firms, in low-productivity jobs and in less developed regions. Finally, we show that informal networks have a negative impact on wages, controlling for individual and firm characteristics.
2010
The Use of Informal Networks in Italian Labor Markets: Efficiency or Favoritisms? / Ponzo, Michela; Scoppa, V.. - In: JOURNAL OF SOCIO-ECONOMICS. - ISSN 1053-5357. - ELETTRONICO. - 39:1(2010), pp. 89-99. [10.1016/j.socec.2009.07.007]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11588/548714
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