Informal Hiring and Income in the Labor Market

Abstract

This note explores the generalizability of the conventional belief that jobs found through weak social ties and through work-related social ties provide higher incomes than jobs found through other means. Data are analyzed from a sample which is representative of a complete cross-section of a large metropolitan labor market. The results show that zero-order relationships generalize in most instances to broadly defined populations. However, the effectiveness of weakly-tied and work-related informal contacts becomes greatly diminished when controls are added for measures of worker productivity characteristics.