Do informal contacts increase labor market inequality? Social ties, job access and wages for the unemployed

This paper analyzes, for a large sample of unemployed workers, who finds a job through a personal contact and how using a personal contact affects job quality. We argue that the distinction between work-related and communal contacts is decisive. Using a dataset for Switzerland which merges register data with a longitudinal survey of unemployed jobseekers, we find that work contacts are disproportionately used by privileged jobseekers: male mid-aged professionals and managers. In contrast, communal contacts act as search method of last resort; they are used by immigrants, the working class, the very young and elderly. Using a communal contact does not affect wages, but is associated with longer unemployment.