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Job Recruitment Networks and Migration to Cities in India

Abstract : Economists have focused on job search and supply-side explanations for network effects in labour transactions. We develop and tests an alternative explanation for the high prevalence of network-based labour market entry in developing countries. In our theoretical framework, employers use employee networks as screening and incentive mechanisms to improve the quality of recruitment. Our framework suggests a negative relationship between network use and the skill intensity of jobs, a positive association between economic activity and network use and a negative relationship between network use and pro-labour legislation. Social identity effects are expected to intensify compared to information-sharing and other network mechanisms. Using data from an all-India Employment Survey we implement a novel empirical strategy to test these relationships and find support for our demand-side explanation.
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Vegard Iversen, Kunal Sen, Arjan Verschoor, Amaresh Dubey. Job Recruitment Networks and Migration to Cities in India. The Journal of Development Studies, Taylor & Francis (Routledge), 2009, 45 (04), pp.522-543. ⟨10.1080/00220380902725688⟩. ⟨hal-00518321⟩

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