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Job Search Channels, Neighborhood Effects, and Wages Inequality in Developing Countries: The C olombian Case
Author(s) -
Nicodemo Catia,
García Gustavo Adolfo
Publication year - 2015
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/deve.12070
Subject(s) - closeness , inequality , social network (sociolinguistics) , economics , labour economics , wage inequality , wage , function (biology) , demographic economics , computer science , mathematics , social media , mathematical analysis , world wide web , evolutionary biology , biology
This paper analyzes the relationship between social networks and the probability of finding a job. We explore geographic closeness as the social interaction to explain the job search function. Using data from C olombia in 2009, we calculate how neighborhoods have an effect on the channel used to find a job (social network versus no social network). In addition, we study how wage premium relates to using a social network in finding a job, exploring the inequality that can arise using a different job search method. Our results show that neighborhood affects the individual's job search method and that referred workers earn less at the bottom of the wage distribution with respect to non‐referred workers. C olombia presents persistent high levels of informality and inequality with the existence of spatial clusters that impose important social and economic costs with strong informational asymmetries on the job market.