This paper develops a matching model of the labor market with heterogeneous firms, on-the-job search and family referrals. The overall effect of referrals on wages can be decomposed into three distinct components. First, if referrals are used to help unemployed partners find jobs, then...

This paper incorporates job search through personal contacts into an equilibrium matching model with a segregated labor market. Firms can post wage offers in the regular job market, alternatively they can save on advertising costs and rely on word-of-mouth communication. Wages are then...