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Does It Matter Who I Work For And Who I Work With? The Impact Of Owners And Coworkers Birthplace And Race On Hiring And Wages, Monica Garcia-Perez

Economics Faculty Working Papers

This paper investigates the effect of firm owners and coworkers on hiring patterns and wages. Firstly, I explore the potential mechanisms generating their interrelation. Using a search model where social networks reduce search frictions, I develop the theoretical implications of social ties between owners and workers for individual labor market outcomes. In the model, wages are derived endogenously as a function of the efficiency of the social ties of current employees. Firms decide whether to fill their vacancies by posting their offers or by using their current workers’ connections. As a result, individuals with a more efficient connection tend to …