ABSTRACT
An extensive literature has addressed the impacts of social interactions and networks on labour market outcomes (McEntarfer 2003; Ioannides and Loury 2004; Wahba and Zenou 2005). One strand of this literature has focused on how networks and peer emulation may affect migration within or across countries (Stark 1991; Hatton and Williamson 1998; Munshi 2003). Empirical research has, however, found it hard to distinguish between network effects, which are transmitted to a migrant by virtue of the social connections he has access to, and peer emulation effects which are transmitted through the local neighbourhood he belongs to, whether at origin or destination. Crucially, the empirical literature has failed to distinguish the case where employers recruit through employee networks from that where networks simply transmit information about vacancies during job search. The tendency, therefore, has been to conflate demand-side and supply-side explanations for network effects treating them as one and the same thing.
