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Erschienen in: The Annals of Regional Science 2/2016

02.02.2016 | Original Paper

Social networks and Black–White differentials in public employment agency usage among mature job seekers

verfasst von: Marie T. Mora, Alberto Dávila, James Boudreau

Erschienen in: The Annals of Regional Science | Ausgabe 2/2016

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Abstract

We conceptually and empirically analyze how local labor market weakness impacts the usage of public employment agencies (PEAs) between Blacks and Whites in the USA. Employing restricted-use data from the National Longitudinal Survey of Youth, our empirical results indicate that Blacks have higher PEA-usage rates than Whites, likely caused by their higher unemployment rates. However, Whites in regions with relatively weak professional networks tended to tap into PEAs more than otherwise similar Blacks, reducing the Black–White differential in PEA usage. These findings fit with the conceptual prediction that Whites endure a disproportionate negative impact when tighter labor markets (and thus fewer referrals) exist. They also raise the question about whether current anti-labor-market discrimination policies account for potential job-referral differentials between Black and Whites. To the extent that employers favor employee recommendations from members of a particular racial/ethnic group, then perhaps policy targeting discrimination in the workplace should consider how job openings are initially advertised and subsequently filled.

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Fußnoten
1
The number of unemployed job seekers is not the same as the number of unemployed workers, as the former excludes workers on temporary layoffs. Nevertheless, the 164 % increase in PEA usage was disproportionate to the 107 % growth in the number of unemployed job seekers (from 6.102 million to 12.635 million workers), resulting in a rise in the share of unemployed job seekers using PEAs from 17.7 to 22.6 % during this time.
 
2
For an overview of the job-search literature and the use of PEAs in the USA, see LaLonde (2002).
 
3
While Calvó-Armengol and Jackson (2004) focus on many different network structures with varying levels of connectivity, our concern here is on search activity, so we purposely keep the groups’ network structures both simple and identical.
 
4
Nevertheless, the theoretical results based on a more traditional infinite-horizon problem with a recursive formulation shown in “Appendix” support the qualitative implications of the two-period version.
 
5
We assume parameters are such that the agents’ optimal choice is an interior solution. Obviously, if the wage (for example) is high enough, agents would simply search at full effort, but this would prevent meaningful comparisons.
 
6
The NLSY79 started in 1979 with a nationally representative sample of individuals born between 1957 and 1964, and residing in the USA as of January 1, 1979. Blacks and Hispanics were oversampled to increase their sample sizes; the NLSY79 provides sampling weights to maintain the national representation of the cohort. A series of follow-up surveys have been conducted, but 2006 is the last year which includes the Current Population Survey (CPS) component used to identify PEA utilization in job-search methods.
 
7
The NLSY79 provides the local unemployment rates in the restricted-use Geocode data. In the 2006 survey, this variable measures the unemployment rate in selected micropolitan and metropolitan statistical areas (MSAs) in March 2006; for individuals residing outside of these MSAs, this variable equals the unemployment rate in the rest of the state (i.e., net of these MSAs). See the NLSY79 (BLS 2010) for more details.
 
8
While we would have preferred to further study PEA usage among Hispanics, the number of Hispanics in the sample using PEAs (around 15) was too small to conduct a reliable analysis.
 
9
This variable estimates the percentage of employers using PEAs among all employer firms in the state in 2006; the authors thank Ronald Bird and William Spriggs at the US Department of Labor for sharing these data.
 
10
The model could easily be used to consider how alternative network structures affect job-search behavior, but we are only interested in how the number of employed network connections an unemployed agent has factors into their search decision.
 
11
In fact, multiple equilibria may exist. Since the game exhibits strategic complementarity, coordination problems may exist in the sense that a lower level of search effort may be optimal for one agent given that all other agents are searching with low intensity. If all agents were to search harder, however, that too could be an equilibrium. As in CJ, we ignore potential coordination problems and focus on maximal equilibria, that is those (symmetric) equilibria that feature the highest levels of search effort.
 
12
MATLAB code available upon request.
 
13
We do not emphasize results for an increase in the job separation rate on its own, as it factors into the agents’ search effort decision only indirectly.
 
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Metadaten
Titel
Social networks and Black–White differentials in public employment agency usage among mature job seekers
verfasst von
Marie T. Mora
Alberto Dávila
James Boudreau
Publikationsdatum
02.02.2016
Verlag
Springer Berlin Heidelberg
Erschienen in
The Annals of Regional Science / Ausgabe 2/2016
Print ISSN: 0570-1864
Elektronische ISSN: 1432-0592
DOI
https://doi.org/10.1007/s00168-016-0746-9

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