Job search via social networks: An analysis of monetary and non-monetary returns for low-skilled unemployed

Using a search theoretical model, we analyse the effects of the information flow via social networks (friends, relatives and other personal contacts) by comparing monetary and non-monetary outcomes in obtaining jobs via networks versus formal methods. Propensity-score matching on survey data from the low-skilled unemployed is used to identify causal effects. The analysis takes into account unobserved heterogeneity by applying Rosenbaum bounds. Because of the potential ambiguity when comparing outcomes in accepted jobs, we also examine the effectiveness of job searches using social networks as a source of information compared to not using networks. We find no evidence for causal effects on monetary outcomes and, at best, only weak evidence for effects on non-monetary job outcomes.