Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149005
Authors: 
Stupnytska, Yuliia
Year of Publication: 
2015
Series/Report no.: 
Working Papers, Center for Mathematical Economics 548
Abstract: 
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.
Subjects: 
social capital
asymmetric information
uncertainty
Social Network System
Facebook
Linkedin
wage contract
wage dispersion
social welfare
JEL: 
J23
J31
J38
J64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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