A dynamic model of job networking and persistent inequality

Heterogenous Agents, Interactions and Economic Performance, 2003

Recommended citation: Krauth, Brian (2003). "A dynamic model of job networking and persistent inequality." In Cowan R., Jonard N. (eds) Heterogenous Agents, Interactions and Economic Performance, Lecture Notes in Economics and Mathematical Systems, vol 521. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-55651-7_12

Although it rarely appears in economic models, job networking is a common feature of labour market behaviour. This paper develops a model of the macroeconomic implications of job networking for the behaviour of employment rates in an economy or community. I find that the spillovers created by networking produce a highly nonlinear relationship between community human capital and community employment rates. The model can be applied to understand the emergence of a low-employment “underclass” community in which even highly skilled or motivated individuals face severe employment difficulties.