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| Family Social Network and Employment Quality: Analysis Based on Data from the 2009-2015 National College Graduates Employment Investigation |
| FENG Shilan, TAN Ya, JIANG Cheng
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School of Marxism, Peking University;
Guanghua School of Management, Peking University;
Graduate School of Education, Peking University |
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Abstract As a policy guarantee of economic development in the 13th Five-Year Plan for Economic and Social Development of China, “employment first,” which concerns people’s well-being, is prioritized. According to the report of the 19th National Congress of the Communist Party of China, “Employment is pivotal to people’s wellbeing” and we should “adhere to the strategy of giving priority to employment and the active employment policy so as to achieve higher quality and full employment.” The Report on the Work of the Government in 2019 further promotes the employment-first policy to the same high level as the fiscal and monetary policies. Social networks play an important role in employment. They not only affect information acquisition during the job search process but are also closely related to employment quality. To investigate the effect of social networks on employment quality, we first introduce the accumulation decision of family social networks into the endogenous discount factor model, analyze the mechanism through which family social networks affect employment quality, and explain the employment motivation to accumulate social networks. We then discuss two important dimensions of employment quality (i.e., employment satisfaction as it relates to individual welfare and the match between job and skill/major as it relates to resource allocation efficiency), thus analyzing micro welfare and macro efficiency in an integrated framework. Third, we explore the mechanism through which family social networks affect employment quality. We discuss the direct effect of social networks on employment and analyze their indirect effect via experiences during college.
Based on the endogenous discount factor model in Becker and Mulligan (1997), we introduce the accumulation decision of family social networks and discuss the mechanism through which family social networks affect employment decisions. Specifically, family social networks influence the utility of households via the discount factor and the probability of industry entry, leading to the heterogenous optimal accumulation decision of social networks. We find that family social networks complement the major disadvantage of graduates. Considering the difficulty of admission into popular majors, individuals with wider family social networks strategically apply for majors with higher admission probabilities and enter high-income industries with the help of their social networks. Such decisions increase the employment satisfaction of these graduates but decrease the match between job and skill.
We then use data from the 2009 to 2015 National College Graduates Employment Investigation to empirically test the model hypotheses. The empirical results indicate that family social networks increase employment satisfaction but decrease the match between job and skill. We test three potential mechanisms leading to such results: (1) family social networks help graduates from various majors enter high-income industries, as indicated by the model; (2) family social networks help graduates obtain high-quality internships; and (3) family social networks give graduates more opportunities to change majors in college. We find that the first mechanism is the most significant.
Furthermore, we conduct robustness tests on four aspects: the time trend of the effect, the scope of the effect, the strength of the effect, and the regional limitation of family social networks. We obtain four findings. First, the marginal impact of family social networks on employment quality weakens gradually. Second, for families with wider social networks, social networks have a stronger marginal effect on employment quality. Third, there is no significant difference in the intensity between sons and daughters when families use social networks, but utilization intention is diluted by the number of children. Furthermore, the effect of social networks in families with multiple children is lower than that in single-child families. Fourth, family social networks are limited by geographic distance, but their impact on employment quality does not diminish as geographic distance increases.
Overall, from the micro perspective, family social networks increase the employment satisfaction of graduates, thus improving individual welfare. However, from the macro perspective, they decrease the match between job and skill, distort the allocation efficiency of human capital resources, and influence labor productivity in the short run. Our findings provide further theoretical support for improving employment policy and can contribute to strengthening the nation through human resource development.
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Received: 27 February 2019
Published: 24 October 2019
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