Social Capital and Wages: An Econometric Evaluation of Social Networking's Effects

The goal of this paper is to get an econometric evaluation of the effects of the social network's mobilization, as a job search strategy, on wages. We make use of switching regression models to deal simultaneously with an endogenous selection issue in the network's choice and the existence of two different regimes of wage determination. Econometric estimates provide evidence for the existence of a selection effect on the choice of network but, after correcting the selection bias on the wage equations, the effect of social network on wages is negative. Copyright 2007 The Authors; Journal compilation 2007 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd..