The Impact of Job Referral from Different Social Connections on Initial Wages: Evidence from Chinese Labor Market

Abstract

Job referrals are a popular approach to finding a job through social ties. In the Chinese labor market, it is popular to locate jobs through social contacts, which is thought to be a means to earn a higher starting salary. The purpose of this paper was to investigate the disparities in starting salaries across employment found through various social relationships. Based on social network theory, this research added variables to the Mincer-type equation for regression analysis to measure the strength of social relations. The findings of this study, which used data from the China Household Income Project (CHIP 2018), showed that, unlike previous studies that focused on strong ties in the Chinese labor market, jobs found through weak ties have significantly higher starting salaries than jobs found through strong ties, and the difference in starting salaries for jobs found by migrant workers through various social ties is more pronounced. As a result, under the bleak backdrop of the labor market and decreasing economic growth, it was recommended that job seekers, particularly migrant workers, broaden their social circle in order to seek better initial pay.