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IZA Discussion Paper No. 13857
November 2020
Searching with Friends
A. Stefano Caria, Simon Franklin, Marc J. Witte

published in: Journal of Labor Economics, 2023, 41 (4), 887–922

We study how active labor market policies affect the exchange of information and support among jobseekers. Leveraging a unique social network survey in Ethiopia, we find that a randomized job-search assistance intervention reduces information sharing and support between treated jobseekers and their active job-search partners. Due to lower job-search support, untreated individuals search less and, suggestively, have worse employment outcomes. These results are explained by a model of networks where unemployed individuals form job-search partnerships to exploit the complementarities of job search. These partnerships are broken if policy creates inequality in the access to information about job vacancies.

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