[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ldr/wpaper/6.html
   My bibliography  Save this paper

Social Networks, Employment and Worker Discouragement: Evidence from South Africa

Author

Listed:
  • Susan Godlonton
  • Justine Burns

    (School of Economics, University of Cape Town)

Abstract
Social networks are increasingly being recognised as having an important influence on labour market outcomes, since they facilitate the exchange of job related information. Access to information about job opportunities as well as perceptions about the buoyancy of the labour market depend critically on the social structures and the social networks to which labour market participants belong. In this paper, we examine the impact of information externalities generated through network membership on labour market status. Using Census data from South Africa, a country characterised by high levels of unemployment and worker discouragement, we adopt an econometric approach that aims to minimise the problems of omitted variable bias that have plagued many previous studies of the impact of social networks. Our results suggest that social networks may enhance employment probabilities by an additional 3 to 9%, and that failure to adequately control for omitted variables would lead to substantial over-estimates of the network co-efficient. Social networks affect both employment probabilities and worker discouragement, and are particularly important for individuals residing in rural areas, those with disabilities, and those who are black or female.

Suggested Citation

  • Susan Godlonton & Justine Burns, 2006. "Social Networks, Employment and Worker Discouragement: Evidence from South Africa," SALDRU Working Papers 6, Southern Africa Labour and Development Research Unit, University of Cape Town.
    • Handle: RePEc:ldr:wpaper:6
    as

    Download full text from publisher

    File URL: https://opensaldru.uct.ac.za/bitstream/handle/11090/48/06_06.pdf?sequence=1
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kingdon, Geeta & Knight, John, 2006. "The measurement of unemployment when unemployment is high," Labour Economics, Elsevier, vol. 13(3), pages 291-315, June.
    2. Abel, Andrew B, 1990. "Asset Prices under Habit Formation and Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 80(2), pages 38-42, May.
    3. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
    4. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-261, March.
    5. Kenneth J. Arrow & Ron Borzekowski, 2004. "Limited network connections and the distribution of wages," Finance and Economics Discussion Series 2004-41, Board of Governors of the Federal Reserve System (U.S.).
    6. Roger Waldinger & Thomas Bailey, 1991. "The Continuing Significance of Race: Racial Conflict and Racial Discrimination in Construction," Politics & Society, , vol. 19(3), pages 291-323, September.
    7. Datcher, Linda, 1983. "The Impact of Informal Networks of Quit Behavior," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 491-495, August.
    8. Timothy G. Conley & Christopher R. Udry, 2010. "Learning about a New Technology: Pineapple in Ghana," American Economic Review, American Economic Association, vol. 100(1), pages 35-69, March.
    9. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
    10. Marianne Bertrand & Erzo F. P. Luttmer & Sendhil Mullainathan, 2000. "Network Effects and Welfare Cultures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 1019-1055.
    11. George J. Borjas, 2021. "Ethnicity, Neighborhoods, and Human-Capital Externalities," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 7, pages 135-160, World Scientific Publishing Co. Pte. Ltd..
    12. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    13. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
    14. Volker Schöer & Murray Leibbrandt, 2006. "Determinants Of Job Search Strategies: Evidence From The Khayelitsha/Mitchell'S Plain Survey," South African Journal of Economics, Economic Society of South Africa, vol. 74(4), pages 702-724, December.
    15. Stephan Klasen & Ingrid Woolard, 2009. "Surviving Unemployment Without State Support: Unemployment and Household Formation in South Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 18(1), pages 1-51, January.
    16. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    17. Case, A.C. & Katz, L.F., 1991. "The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths," Harvard Institute of Economic Research Working Papers 1555, Harvard - Institute of Economic Research.
    18. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    19. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    20. Rees, Albert, 1986. "An Essay on Youth Joblessness," Journal of Economic Literature, American Economic Association, vol. 24(2), pages 613-628, June.
    21. Geeta G. Kingdon & John B. Knight, 2000. "Are searching and non-searching unemployment distinct states when unemployment is high? The case of South Africa," CSAE Working Paper Series 2000-02, Centre for the Study of African Economies, University of Oxford.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Susan Godlonton, 2020. "Employment Risk and Job-Seeker Performance," Journal of Human Resources, University of Wisconsin Press, vol. 55(1), pages 194-239.
    2. Ayça Akarçay Gürbüz & Sezgin Polat & Mustafa Ulus, 2014. "In Limbo: Exploring Transition to Discouragement," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 527-551, September.
    3. KUEPIE Mathias & TENIKUE Michel & WALTHER Olivier, 2014. "Small businesses performance in West African border regions: Do social networks pay off?," LISER Working Paper Series 2014-06, Luxembourg Institute of Socio-Economic Research (LISER).
    4. Stips, Felix & Kis-Katos, Krisztina, 2020. "Ethnic Networks and the Employment of Asylum Seekers: Evidence from Germany," IZA Discussion Papers 12903, Institute of Labor Economics (IZA).
    5. Margherita Scarlato & Giorgio d'Agostino, 2019. "Cash Transfers, Labor Supply, and Gender Inequality: Evidence from South Africa," Feminist Economics, Taylor & Francis Journals, vol. 25(4), pages 159-184, October.
    6. Alfred Kechia Mukong, 2017. "Peer Networks and Tobacco Consumption in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 85(3), pages 341-367, September.
    7. Ramírez, Eduardo & Ruben, Ruerd, 2015. "Gender Systems and Women’s Labor Force Participation in the Salmon Industry in Chiloé, Chile," World Development, Elsevier, vol. 73(C), pages 96-104.
    8. Andre Hofmeyr, 2008. "Social Networks and Ethnic Niches: An Econometric Analysis of the Manufacturing Sector in South Africa," Working Papers 083, Economic Research Southern Africa.
    9. Kim Yi Dionne, 2015. "Social networks, ethnic diversity, and cooperative behavior in rural Malawi," Journal of Theoretical Politics, , vol. 27(4), pages 522-543, October.
    10. Felix Stips & Krisztina Kis-Katos, 2020. "The impact of co-national networks on asylum seekers’ employment: Quasi-experimental evidence from Germany," PLOS ONE, Public Library of Science, vol. 15(8), pages 1-22, August.
    11. Rebien, Martina, 2019. "Do social networks mitigate stigma effects from long-term unemployment?," IAB-Discussion Paper 201916, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    12. Emily Frame & Ariane de Lannoy & Murray Leibbrandt, 2016. "Measuring multidimensional poverty among youth in South Africa at the sub-national level," SALDRU Working Papers 169, Southern Africa Labour and Development Research Unit, University of Cape Town.
    13. Andre Hofmeyr, 2010. "Social Networks And Ethnic Niches: An Econometric Analysis Of The Manufacturing Sector In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(1), pages 107-130, March.
    14. Walther, Olivier J. & Tenikue, Michel & Trémolières, Marie, 2019. "Economic performance, gender and social networks in West African food systems," World Development, Elsevier, vol. 124(C), pages 1-1.
    15. Miracle Ntuli & Prudence Kwenda, 2013. "Labour Unions and Wage Inequality Among African Men in South Africa," Working Papers 13159, University of Cape Town, Development Policy Research Unit.
    16. Rao, Neel, 2016. "Social effects in employer learning: An analysis of siblings," Labour Economics, Elsevier, vol. 38(C), pages 24-36.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patrick Bayer & Stephen L. Ross & Giorgio Topa, 2008. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1150-1196, December.
    2. Patrick Bayer & Stephen L. Ross, 2006. "Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application," Working papers 2006-13, University of Connecticut, Department of Economics, revised Jan 2009.
    3. Andre Hofmeyr, 2010. "Social Networks And Ethnic Niches: An Econometric Analysis Of The Manufacturing Sector In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(1), pages 107-130, March.
    4. Anna Piil Damm, 2009. "Ethnic Enclaves and Immigrant Labor Market Outcomes: Quasi-Experimental Evidence," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 281-314, April.
    5. Ian M. Schmutte, 2015. "Job Referral Networks and the Determination of Earnings in Local Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 33(1), pages 1-32.
    6. Buhai, I. Sebastian & van der Leij, Marco J., 2023. "A Social Network Analysis of Occupational Segregation," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    7. Lorenzo Cappellari & Konstantinos Tatsiramos, 2010. "Friends’ Networks and Job Finding Rates," DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro ieil0059, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    8. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 561-624, Elsevier.
    9. Federico Cingano & Alfonso Rosolia, 2012. "People I Know: Job Search and Social Networks," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 291-332.
    10. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    11. Delia Furtado & Nikolaos Theodoropoulos, 2009. "Intermarriage and Immigrant Employment: The Role of Networks," RF Berlin - CReAM Discussion Paper Series 0906, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    12. Contreras, Dante & Kruger, Diana & Ochoa, Marcelo & Zapata, Daniela, 2007. "The Role of Social Networks in the Economic Opportunities of Bolivian Women," IDB Publications (Working Papers) 3315, Inter-American Development Bank.
    13. Dante Contreras & Daniela Zapata & Diana Kruger & Marcelo Ochoa, 2007. "El papel de las redes sociales en las oportunidades económicas de las mujeres de Bolivia," Research Department Publications 3241, Inter-American Development Bank, Research Department.
    14. Federico Cingano & Alfonso Rosolia, 2006. "People I Know: Workplace Networks and Job Search Outcomes," Temi di discussione (Economic working papers) 600, Bank of Italy, Economic Research and International Relations Area.
    15. Feng, Yao, 2011. "Local spillovers and learning from neighbors: Evidence from durable adoptions in rural China," MPRA Paper 33924, University Library of Munich, Germany.
    16. Fishman, Arthur & Fishman, Ram & Gneezy, Uri, 2019. "A tale of two food stands: Observational learning in the field," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 101-108.
    17. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, September.
    18. Machikita, Tomohiro, 2006. "Are Job Networks Localized in a Developing Economy? Search Methods for Displaced Workers in Thailand," IDE Discussion Papers 84, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Andreia Tolciu, 2010. "The Economics of Social Interactions: An Interdisciplinary Ground for Social Scientists?," Forum for Social Economics, Taylor & Francis Journals, vol. 39(3), pages 223-242, January.
    20. Damm, Anna Piil, 2014. "Neighborhood quality and labor market outcomes: Evidence from quasi-random neighborhood assignment of immigrants," Journal of Urban Economics, Elsevier, vol. 79(C), pages 139-166.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ldr:wpaper:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alison Siljeur (email available below). General contact details of provider: https://edirc.repec.org/data/sauctza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.