Informal Job Search Research Articles

Wage Bargaining Power of Internal Migrant Workers: Evidence from Urban Labor Market in China

This study analyses the wage bargaining power of employers and internal migrant workers in the urban labor market in China using a two-tiered SFA model. The findings indicate that bargaining power decreases the observed wage relative to the benchmark wage which is associated with worker’s actual productivity. The availability of migrant labor is identified to be a key variable in the wage bargaining process. This study reveals that the migrant workers who obtain jobs via informal job search methods stand in a weak bargaining position relative to those using formal search methods which is consistent with limited choices hypothesis. Additionally, the migrant workers in the manufacturing and construction industries or producing and processing occupations extract surplus nearly identical to other groups.

Education, Off-the-Job Vocational Training, and Early Employment Outcomes: Evidence from Italy

Education and training are primary sources of individual human capital. We explored the relationship between education and off-the-job vocational training and the impact of training programmes on youth employment in Italy. We focused on three outcomes: employment probability, use of formal/informal job search channels, and skill matching. We identified programme effects by comparing the outcomes of treatment and control groups using propensity score matching with a robustness check to assess the potential bias due to unobservable characteristics. Individuals with vocational high school degrees are more likely to participate in vocational training programmes, but in southern regions, individuals with technical or generalist high school degrees also attend vocational training programmes. Vocational training programmes have positive effects on youth employment outcomes, reduce the use of informal job search channels, and improve skill matching, especially in the centre-northern regions.

The causal effect of informal job search on wage and job satisfaction: evidence from Egypt and Jordan using random forest method

PurposeThis study aims to examine the impact of finding a job through family and friend contacts on employees' wages and job satisfaction.Design/methodology/approachThis study uses machine learning techniques in economics to estimate the causal effect of being hired through informal contacts on wages and job satisfaction using cross-sectional data from the Higher Education Graduates Survey 2012 (HEGS, 2012) in Egypt and Jordan.FindingsThe author's results confirm that negative and positive consequences are likely to occur. In Egypt, a wage penalty of 28% is estimated in the starting wage, but the impact diminishes in the last wage. By contrast, in Jordan, no penalty is captured in the starting wage, but a premium of 10% is estimated in the last wage. Job satisfaction is negatively affected by the penalty in the starting wage.Social implicationsJob market search methods that allow for professional job referrals, facilitate more efficient information transfer between job-seekers and employers and provide opportunities for job-seekers with weak social capital should be implemented to lower dependence on informal search methods.Originality/valueThe research provides comprehensive evidence about finding a job through informal contact with employees' well-being. The consequences of finding a job using family and friends' contacts, whether positive or negative, cannot be ignored. Future research could benefit from the findings of this study.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2022-0318.

Informal job search method and labour market outcomes: evidence from urban Chinese workers

ABSTRACT Using a representative sample of Chinese urban employees, we empirically study the impact of the utilization of informal job search through social networks on wage. We find a premium of initial wage associated with job referral, but the wage premium diminishes over tenure. We also find that the effect of job referral on initial wage reduces when human capital plays a more important role, or the recruitment process and the economic system are more market-oriented. Our findings are consistent with the learning theory that job referral can reduce information asymmetry between employees and employers at the beginning they meet, but the informational advantage diminishes over time as the employers know non-referred workers gradually.

Social Capital and Its Effect on Labour Market (Mis)match: Migrants\u2019 Overqualification in Germany

If a person is overqualified in the sense that an employee’s level of training exceeds the job requirements, then some human capital lies idle and cannot be converted into appropriate (monetary and non-monetary) returns. Migrants are particularly at risk of being overqualified in their employment; however, this phenomenon cannot be fully explained by differences in human capital or socio-economic characteristics. This paper examines whether social capital plays a decisive role in migrants’ risk of overqualification in Germany. Using data from the German IAB-SOEP Migration Sample, we analyse the job search process of migrants to determine whether social networks influence their risk of being employed below their acquired educational level. We estimate logistic regression models and find that social capital influences the adequacy of migrants’ jobs: We show that migrants are at a greater risk of overqualification if they use only informal job search strategies such as relying on friends or family members. Moreover, we find that homophilous migrant networks and jobs in employment niches are risk factors for overqualification. We conclude that the combination of informal job search modes and homophilous migrant networks leads to a comparably high risk for migrants of being overqualified in their employment in the German labour market.

Doubly disadvantaged? Gender, informal job search, and labor market outcomes among South Korea’s immigrant workers

AbstractThis research investigates the gendered labor market consequences of immigrant social networks. Based on a nationally representative sample and using alternative analytic strategies, the present study investigates how and the extent to which informal job search, that is, finding a job through a personal contact, is associated with the earnings outcome for male and female immigrant workers in South Korea. Unlike most previous studies, it distinguishes between job contact sources: bonding and bridging. Contrary to the notion that immigrant women are ‘doubly disadvantaged’ in the labor market, findings indicate that informal job search yields lower monthly income for male workers only. In addition, significant evidence suggests that for the male subsample, securing a job through a bonding (co-ethnic) tie results in an earnings penalty. Negative income returns on using a bridging (inter-ethnic) tie, on the other hand, receive conditional empirical support.

Unemployment trends and labour market entry in Ghana: job search methods perspective

ABSTRACTStatistical information is critical for both government and the general public for monitoring, evaluation, and implementation of employment policies and programmes. This paper revisits the labour market trends between 2012 and 2016 and discusses the importance of job search methods for labour market entry in Ghana. We explored job search methods (Formal and Informal Methods) used by 235 participants from seven regions of Ghana. Results revealed that many of the participants highly relied on informal job search methods to secure jobs across all demographic variables. This has been the case in Ghana when unemployment continues to increase leading to a difficult labour market entry. Our findings, therefore, suggest that in such a restricted labour market, employment success is likely to be determined by ‘whom you know’. The results offer practical recommendations for private and public employment consultancies, as well as policymakers to institute impactful intervention programmes for job seekers on the efficient ways of developing and sustaining meaningful social capital/networks to enhance their chances of finding employment.

On-the-job and off-the-job embeddedness differentially influence relationships between informal job search and turnover.

Whereas informal job search (i.e., using personal contacts for job search) is positively associated with the receipt of job offers, research has yet to consider the extent to which informal job search translates into current employees' turnover decisions or to investigate factors that may restrain (or facilitate) the translation of informal job search into turnover decisions. In this study, we propose that on-the-job and off-the-job embeddedness play distinct roles in strengthening or weakening the positive relationship between informal job search and turnover intentions and behavior. We assert that on-the-job embeddedness reduces the likelihood that informal job search translates into turnover decisions, whereas off-the-job embeddedness strengthens the positive association between informal job search and turnover decisions. We tested these hypotheses across two samples of employed nurses. Although results were mixed, we found evidence that on-the-job embeddedness dampened the positive relationships of informal job search with turnover intentions and behaviors, whereas off-the-job embeddedness facilitated the positive relationships between informal job search and turnover decisions. Taken together, findings suggest that on-the-job and off-the-job embeddedness influence informal job search processes differently. We discuss the implications of these findings for how organizations manage employees' informal job search activities as well as how researchers approach the study of job embeddedness. (PsycINFO Database Record (c) 2019 APA, all rights reserved).

Informal job search through social networks and vacancy creation

In this paper I study the interaction between firms’ decisions to open vacancies and workers’ investment in social networks to find jobs. The transmission of information in the network generates positive search externalities so that in equilibrium vacancy creation and socialization are strategic complements. Despite this, there is a unique interior stable equilibrium.

Informal search, bad search?: the effects of job search method on wages among rural migrants in urban China

The use of informal job search method is prevalent in many countries. There is, however, no consensus in the literature on whether it actually matters for wages, and if it does, what are the underlying mechanisms. We empirically examine these issues specifically for rural migrants in urban China, a country where one of the largest domestic migration in human history has occurred over the past decades. We find that there exists a significant wage penalty for those migrant workers who have conducted their search through informal channels, despite their popularity. Our further analysis suggests two potential reasons for the wage penalty: (1) the informal job search sends a negative signal (of workers’ inability to successfully find a job in a competitive market) to potential employers, resulting in lower wages, and (2) there exists a trade-off between wages and search efficiency for quicker entry into local labor market. We also find some evidence that the informal job search may lead to low-skilled jobs with lower wages. We do not find strong evidence supporting alternative explanations.

Informal Search, Bad Search? The Effects of Job Search Method on Wages Among Rural Migrants in Urban China

The use of informal job search method is prevalent in many countries. There is, however, no consensus in the literature on whether it actually matters for wages, and if it does, what are the underlying mechanisms. We empirically examine these issues specifically for rural migrants in urban China, a country where one of the largest domestic migration in human history has occurred over the past decades. We find that there exists a significant wage penalty for those migrant workers who have conducted their search through informal channels, despite their popularity. Our further analysis suggests two potential reasons for the wage penalty: 1) the informal job search sends a negative signal (of workers' inability to successfully find a job in a competitive market) to potential employers, resulting in lower wages; and 2) there exists a trade-off between wages and search efficiency for quicker entry into local labor market. We also find some evidence that the informal job search may lead to low-skilled jobs with lower wages. We do not find strong evidence supporting alternative explanations.

A liability of embeddedness? Ethnic social capital, job search, and earnings penalty among female immigrants

Evidence concerning the relationship between ethnic social networks and labor market outcomes is mixed. Some studies indicate that immigrants with more social capital benefit in terms of formal-sector employment, higher occupational status, and greater earnings. Others argue that embeddedness in and reliance on ethnic networks can hamper economic incorporation in the host society. Using multilevel analysis of population-level data, this study examines the association between using a personal contact in the job search and monthly earnings among immigrant women (foreign-born spouses) in Korea. Findings show that, at the individual level, the use of personal contact, both weak and strong ties, is related to lower income. At the contextual level, residing in a community characterized by denser informal interaction among immigrant members is also associated with lower income. Finally, the negative relationship between informal job search and earnings is stronger in a community with more aggregate ethnic social capital.

The use and impact of job search procedures by migrant workers in China

Job search procedures are a form of human capital investment in that they involve current investments to enhance future returns, analogous to human capital investments in areas such as education, training and mobility that yield future returns. While the theoretical and empirical literature on job search is extensive, most of it involves developed countries. There is less on developing countries and very little on China involving migrant workers in spite of their growing practical and policy importance and the fact that they are constantly engaging in job search. This paper examines the use and impact of job search procedures used by migrant workers in China by taking advantage of a rich data set on migrant workers that has information on their job search procedure as well as a wide array of other personal and human capital characteristics. Our OLS estimates indicate that there is no effect on earnings of using informal versus formal job search procedures for migrant workers in China. However, our IV results suggest that the OLS estimates are subject to severe selection bias from the fact that the choice of job search procedure is endogenous, associated with unobservable factors that affect the choice of informal versus formal procedures and that affect the earnings outcome. Our three different IV estimates designed to deal with this bias indicate that informal procedures (various aspects of family and friends) are associated with earnings that are 33 to 43% below the uses of more formal procedures. The decomposition results indicate that the most important variable contributing to pay advantage of those who use formal as opposed to informal procedures is education. In sum, our results suggest that policies to encourage or facilitate migrant workers using more formal job search procedures and reducing barriers that compel them to rely on informal procedures can yield better job matches with higher earnings.

A third type of job search behavior: the use of the formal-informal joint channel in matching individual qualifications with hiring requirements in urban China

This study highlights the necessity of distinguishing the use of the formal-informal joint channel from the sole reliance on either the formal or informal job search channel. I first used interview data collected in three Chinese cities as well as ethnographic case studies in the existing literature to illustrate a typology of the distribution of job search behavior, by focusing on the match between individual qualifications and employers’ hiring requirements. Based on data drawn from the 2003 China General Social Survey, the subsequent quantitative analysis confirms that neither the formal nor the informal job search channel dominates individual job search behaviors in practice. Rather, the formal-informal joint channel is used most frequently. Quantitative findings also show that competitive individual job seekers who possess both certifiable and non-certifiable qualifications are more likely to jointly use formal and informal job search methods. This study confirms that contact use plays a positive role in job searches, but very often in combination with the use of formal job search methods, rather than being used alone.

Formal and informal job search

I develop a model where workers decide how hard to look for a job via formal and informal search channels. The intensity of formal search determines an individual’s arrival rate of offers. The strength of investment in informal search translates into a job contact network in which job offers are transmitted. There are two equilibria, one with high formal search and one with high informal search. The former Pareto dominates the latter.

Short Term Gain, Long Term Pain

This paper examines the role of informal job search methods on the labour market outcomes of displaced workers. Informal job search methods could alleviate short-term labour market difficulties of displaced workers by providing information on job opportunities, allowing them to signal their productivity and may mitigate wage losses through better post-displacement job matching. However if displacement results from reductions in demand for specific sectors/skills, the use of informal job search methods may increase the risk of job instability. While informal job search methods are associated with lower wage losses, they lead to increased job instability and increased risk of subsequent job displacement.

Returns to education of young people in Mongolia

Relatively little is known about the youth labour market in Mongolia. This article studies returns to education of 15–29-year-olds by taking advantage of a recent ad hoc School to Work Transition Survey. Based on augmented Mincerian earnings equations, education and work experience appear to be important determinants of earnings. Vocational does not provide higher wages than compulsory education. Factors bearing wage gains include living in the capital city and in urban areas in general. Factors bearing wage penalties include gender, informal work, training, using informal job search networks and herding. Union membership, being a migrant and civil status are wage-neutral.

Unemployment duration and employability in remote rural labour markets

This paper analyses the barriers to work faced by long- and short-term unemployed people in remote rural labour markets. Applying a broad concept of ‘employability’ as an analytical framework, it considers the attributes and experiences of 190 job seekers (22% of the registered unemployed) in two contiguous travel-to-work areas (Wick and Sutherland) in the northern Highlands of Scotland. The labour demand side of employability is also considered through interviews with 17 employers. The paper identifies the specific job search and other employment problems faced by unemployed people living in isolated rural communities (labour supply); considers the perspective of employers (labour demand); and discusses potential policies to address the needs of unemployed individuals. Many job seekers were found to have gaps in generic and job-specific skills, whilst some (particularly males) were reluctant to pursue opportunities in non-traditional sectors of the economy. The importance of informal job search and recruitment networks (which may exclude the young and the long-term unemployed) and the lack of access to formal employment services in remote areas also potentially contributed to labour market disadvantage. Holistic and client-centred solutions are required to address the barriers faced by these rural job seekers, including adult basic education provision, flexible training focussing on skills and work experience with particular relevance to the new rural economy, and support services for job seekers in isolated areas. These supply-side policies should be combined with demand-side measures to stimulate endogenous and exogenous growth in isolated local economies.

“I Name it and I Claim it—In the Name of Jesus, this Job is Mine”: Job Search, Networks, and Careers for Low-Income Women

Much of the quantitative research on labor market attachment within female low-wage labor markets de-emphasizes the variation within this population. Based on in-depth interviews with 92 women on welfare in San Francisco, this article develops a typology of labor market attachment using cluster analysis and illustrates the variation within this labor market segment by focusing on clerical jobs. Various supply-side factors (i.e., education, work experience, and network structure) and demand-side factors (i.e., wages and occupation) interact with the job search method to shape labor market attachment. For chronically unemployed women, informal job search methods in part explain poor labor market outcomes, whereas career-oriented women use network resources and education to connect to career paths. Policies to increase labor market attachment should recognize the interconnectedness of job search strategies, human capital, networks, and demand-side factors by improving employment brokering and addressing long-term workforce development needs.

Social Networks and Job Search Outcomes among Male and Female Professional, Technical, and Managerial Workers

Scholars have debated whether informal or formal job search methods mediate gendered employment outcomes for women job-seekers relative to men. Existing research suggests that women are disadvantaged in terms of pay and opportunities when using personal contacts or other informal methods to secure job-related information. However, these studies have focused primarily on women in gender-typical occupations. This study contributes to the debate by asking whether women in gender-atypical occupations are also similarly disadvantaged when using contacts as a source of job information; and if so, in what ways do contacts matter? Based on a sample of male and female professional, technical, and managerial workers, we examine the role of personal networks in securing job-related information.