(When) Is job-finding via personal contacts a meaningful concept for social network analysis? A comment to Chua (2011)

Chua (2011) argues that in a meritocratic context, institutions restrict the usefulness of social networks in exerting influence on job seekers’ earnings. Regressing job-finding via personal contacts on earnings, he finds negative effects of influence via personal contacts, especially for the well-educated and individuals working in the state sector. In this comment, I argue that these results are ambiguous because (1) the analysis does not sufficiently distinguish between job ‘search’ methods and job ‘finding’ methods, (2) job-finding method indicates information flow rather than a personal contact's influence, and (3) it remains unclear whether Chua's analysis reflects the effect of network usage in job search per se or the effect of self-selection into network usage by individuals with low earning potential.

► Chua (2011) argues that in a meritocratic context, institutions restrict the usefulness of social networks in exerting influence on job seekers’ earnings.
► His empirical analysis finds a negative correlation between job-finding method “personal contacts” and wages.
► I argue that this result does not unambiguously support his proposition.
► I point out some possible changes to the research strategy that could help to alleviate this problem.