nep-net New Economics Papers
on Network Economics
Issue of 2021‒11‒22
four papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Formalized Employee Search and Labor Demand By Hensel, Lukas; Tekleselassie, Tsegay; Witte, Marc
  2. Trade Networks, Heroin Markets, and the Labor Market Outcomes of Vietnam Veterans By Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
  3. Towards efficient information sharing in network markets By Bertin Martens; Geoffrey Parker; Georgios Petropoulos; Marshall Van Alstyne
  4. Heterogenous criticality in high frequency finance: a phase transition in flash crashes By Jeremy Turiel; Tomaso Aste

  1. By: Hensel, Lukas (Peking University); Tekleselassie, Tsegay (Policy Studies Institute); Witte, Marc (IZA)
    Abstract: Firms often use social networks to find workers, limiting the pool of potential applicants. We conduct a field experiment subsidizing firms' formal vacancy posting. The subsidies increase non-network employee search and shift vacancies towards high-skilled positions. Post-treatment, firms continue searching for high-skilled workers despite reverting to network-based search. This change in skill requirements does not increase vacancy posting or hiring, suggesting substitutability between workers of different skill levels. Finally, we experimentally show that information asymmetries about applicants' skills do not limit firms' formal search. Our results highlight that exposure to different labor market segments can permanently change firms' labor demand.
    Keywords: firms, hiring, social networks, formalization, field experiments
    JEL: D22 J23 J46 C93
    Date: 2021–11
  2. By: Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
    Abstract: The role of ethnic immigrant networks in facilitating international trade is a well-established phenomenon in the literature. However, it is less clear whether this relationship extends to illegal trade and unauthorized immigrants. In this paper, we tackle this question by focusing on the case of the heroin trade and unauthorized Chinese immigrants in the early 1990s United States. Between mid-1980s and mid-1990s, Southeast Asia became the dominant source of heroin in the US. Heroin from this region was trafficked into the US by Chinese organized criminals, whose presence across the country can be approximated by the location of unauthorized Chinese immigrants. Instrumenting for the unauthorized Chinese immigrant enclaves in 1990 with their 1900 counterpart, we first show that Chinese presence in a community led to a sizeable increase in local opiates-related arrests, a proxy for local heroin markets. This effect is driven by arrests for sale/manufacturing of the drugs. Next, we examine the consequences of Chinese-trafficked heroin by looking at its impact on US Vietnam-era veterans - a group particularly vulnerable to heroin addiction in the early 1990s. Using a triple-difference estimation, we find mostly small but statistically significant detrimental effects on labor market outcomes of Vietnam veterans residing in unauthorized Chinese enclaves in 1990.
    Keywords: Trade networks,heroin markets,Vietnam veterans,labor market outcomes
    JEL: F16 F22 J15 K42
    Date: 2021
  3. By: Bertin Martens; Geoffrey Parker; Georgios Petropoulos; Marshall Van Alstyne
    Abstract: Our paper has benefitted from inspiring discussions with Erik Brynjolfsson, Luis Cabral, Rebecca Christie, Maria Demertzis, Erika Douglas, Nestor Duch-Brown, Justus Haucap, Jan Krämer , Maciej Sobolewski, Sebastian Steffen, Tommaso Valletti, Reinhilde Veugelers, Guntram Wolff as well as participants at Ascola 2021, Yale University’s Big Tech and Antitrust Conference 2020, OECD Competition Committee Hearing Dec. 2020, Bruegel, Digital Markets Competition Forum at Copenhagen Business School 16 June 2021, and the...
    Date: 2021–11
  4. By: Jeremy Turiel; Tomaso Aste
    Abstract: Flash crashes in financial markets have become increasingly important attracting attention from financial regulators, market makers as well as from the media and the broader audience. Systemic risk and propagation of shocks in financial markets is also a topic or great relevance who has attracted increasing attention in recent years. In the present work we bridge the gap between these two topics with an in-depth investigation of the systemic risk structure of co-crashes in high frequency trading. We find that large co-crashes are systemic in their nature and differ from small crashes. We demonstrate that there is a phase transition between co-crashes of small and large sizes, where the former involves mostly illiquid stocks while large and liquid stocks are the most represented and central in the latter. This suggest that systemic effects and shock propagation might be triggered by simultaneous withdrawn or movement of liquidity by HFTs and market makers having cross-asset.
    Date: 2021–10

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