Moving Beyond Vagueness: Social Capital, Social Networks, and Economic Outcomes

Abstract

Economists’ understandings of labor markets have gone through several transformations in the last three decades as search theory and spatial mismatch hypotheses have joined human capital theory as major avenues for labor market research. Each of these advances was intended to improve the match between theory and observed dynamics of labor supply, and each posed important contrasts with the explanatory frameworks that had previously held ascendance in labor market research. But in recent decades, as these three modes of inquiry have been theoretically and empirically developed, the importance of social context as a factor in labor market outcomes has become increasingly apparent. Since 1990, elements of research into each of these theories have been converging with a growing social science inquiry into social networks. Understanding the dynamics of social networks is consequently an important area for further improvements in labor market theory.