Professional Networks, Firm Hierarchies and Wage Inequality

The Role of Professional Networks and Firm Hierarchies for Individual Careers and Wage Inequality

Funded by the German Science Foundation (DFG) from 2017-2020.


Principal Investigators

Herbert Dawid

Anna Zaharieva


Short Description:

The purpose of this project is to investigate, from a theoretical perspective, the role of professional networks and firm hierarchies for individual wage dynamics, income inequality and intergenerational mobility. Existing empirical literature reports growing wage inequality in developed economies, which largely takes the form of a widening wage gap between high and low skill workers (wage polarization). In this project we aim to investigate whether an increase in importance of social networks on the labor market can contribute to a rise in wage inequality and an increase in the positive correlation of wage income between generations. The innovative aspect of our project relative to the existing literature is a unified treatment of the evolution of professional networks and career paths of workers in hierarchical firms. In the first stage of the project we will develop a search and matching model of the labour market with heterogeneous skill groups, experience accumulation and hierarchical firms. In the second stage the evolution of professional networks will be endogenized capturing the fact that social ties are often established between coworkers on the same hierarchical level. Taking into account that social ties play a role in career development, the emerging homophily in the social network in this framework may intensify the endogenous sorting of high (low) skill workers to higher (lower) hierarchical positions within firms. A crucial goal of the project is to gain a sound understanding of the effect of these mechanisms on individual career prospects and wage inequality. Finally, it will be explored how the intergenerational correlation of wages is amplified if children have access to the professional network of their parents. Whereas we expect to provide characterizations of the equilibrium with endogenous promotion times in hierarchical firms by analytical means, we will rely on (agent-based) simulations of the models with endogenous networks in the second stage of the project.





Anna Zaharieva

in Interview with "Neue Westfällische", 8th of May 2018.

Workshop at ZIF

Anna Zaharieva, Michael Neugart and Sigrid Quack are organising a workshop at ZIF, "What enables a market to cross national borders? The role of institutions, networks and conventions". 7-8th of June. Program here


The research magazine 'BI.research' has published an interview with Anna Zaharieva explaining the Potential Consequences of Globalization.

DICE Research Seminar Düsseldorf

Anna Zaharieva gives a talk in the DICE Research Seminar at the University of Düsseldorf on the 24 of April, paper title "Social Networks, Promotions and the Glass-Ceiling Effect", joint work with Michael Neugart.

New Journal Article Accepted

Iftikhar, Z. and Zaharieva, A.(2018) General Equilibrium Effects of Immigration in Germany: Search and Matching Approach, Review of Economic Dynamics

Herbert Dawid will give an invited plenary talk

on 'Manager Remuneration, Share Buybacks and Firm Performance' at the Fifth International Symposium in Computational Economics and Finance (http://www.iscef.com/index.html) on April 13, 2018 in Paris.

The magazine 'Technology Review'

has published an article (in German) about the research of the ETACE Group dealing with simulation models in economics ( 'Die simulierte Gesellschaft'). 

New Journal Article Accepted

Dawid, H.; Harting, Ph., Neugart, M. (2018) Cohesion Policy and Inequality Dynamics: Insights from a Heterogeneous Agents Macroeconomic Model, Journal of Economic Behavior and Organization

Social Networks, Referrals and Neighborhood Effects in Frictional Labour Markets

Anna Zaharieva (Bielefeld University), Michael Neugart (Univeristy of Darmstadt) and Michele Battisti (CESifo, Munich) are organising a workshop "Social Networks, Referrals and Neighborhood Effects in Frictional Labour Markets" on the 16th of April at the ZIF.

ZIF issue 1/2018

about the opening conference of the research group "In Search of the Global Labour Market" (Anna Zaharieva, Thomas Welskopp, Ursula Mense-Petermann), http://www.uni-bielefeld.de/(en)/ZiF/Publikationen/Mitteilungen/Ausgaben/

Invited presentation at the ECB

On 27.2.18 Sander van der Hoog and Dirk Kohlweyer presented a progress report on the research project on "Macroprudential policy using an agent-based model of the euro area housing market", joint with ECB staff members of the Division on Macro-Financial linkages and Stress Test Modelling (DG-MF/STM).

New Working Paper

Gezer, S. (2018) Delaying Product Introduction: A Dynamic Analysis with Endogeneous Time Horizon, Universität Bielefeld Working Papers in Economics and Management; 04-2018

Book Chapter

Dawid, H., Delli Gatti, D., (2018) Agent-Based Macroeconomics, Handbook of Computational Economics, Vol. 4 Heterogeneous Agent Models, Hommes, C., LeBaron, B.

New Journal Article

van der Hoog, S. (2018), Surrogate Modelling in (and of) Agent-Based Models: A Prospectus, Computational Economics

Bielefeld Working Papers in Economics and Management No. 04-2017

S. Barde, S. van der Hoog (2017) An Empirical Validation Protocol for Large-Scale Agent-Based Models

ISIGrowth Working Paper 02-2018

Dawid, H.,  Harting, Ph. and van der Hoog, S.  (2018) Manager Remuneration, Share Buybacks and Firm Performance

Talk at ESSEC Business School

Herbert Dawid will give a talk on "Dynamic Investment Strategies and Leadership in Product Innovation" at the ESSEC Business School (www.essec.edu/en/) in Cergy-Pontoise on January 26, 2018.

ASSA Meeting in Philadelphia

Anna Zaharieva participates in the ASSA meeting in Philadelphia, paper title "Formal Search and Referrals from a Firm's Perspective", 5-7th of January 2018.

Presentation of Paper

Philipp Harting presented the paper "On the Effects of Social Influence and Wage Expectations on Wage Inequality" at the 11th Workshop on Economic Complexity, jointly organized by OFCE and the SKEMA Business School.

Anna Zaharieva

gives a talk at the University of Darmstadt "Formal Search and Referrals from a Firm's Perspective" (November 22)

New Journal Article

van der Hoog, S. (2017) The Limits to Credit Growth: Mitigation Policies and Macroprudential Regulations to Foster Macrofinancial Stability and Sustainable Debt, Computational Economics

Journal Article Accepted

Dawid, H., Harting, Ph., Neugart, M. (2017) Fiscal Transfers and Regional Economic Growth, Review of International Economics

"Immigration: Chances and Challenges for the German Labour Market"

Anna Zaharieva gives a key-note speech at the Anniversary workshop "Immigration: Chances and Challenges for the German Labour Market", 21st of October, Konstanz University

Opening Conference of the ZiF Research Group "In Search of the Global Labour Market"

Anna Zaharieva is organizing an opening conference of the ZiF research group "In Search of the Global Labour Market" with two key-note talks by: Michael J. Piore (MIT, Cambridge) "Policy Paradigs and the Challenge to Immigration and Globalization" , 16th of October at 16:00;
Frederic Docquier (Universite Catholique de Louvain) "The Changing Structure of Immigration to the OECD: what welfare effects on member coutnries?", 18th of October at 17:30. Both presentations will take place in the ZiF Plenary Hall.

New Working Paper

Dawid, H., Pellegrino, G., Vivarelli, M. (2017) The Role of Demand in Fostering Product vs Process Innovation: A Model and an Empirical Test, Bielefeld Working Papers in Economics and Management, No. 6-2017

Key-Note Lecture

Herbert Dawid will give a key-note lecture on "Debt crisis, fiscal transfers, and regional economic growth" at the 'International Conference on
Finance and Economic Growth in the Aftermath of the Crisis' from Sep. 11-13 in Milano.

BGTS Mobiltiy Grant

Serhat Gezer has been awarded the BGTS Mobility Grant and will visit Prof. Georges Zaccour at the multi university research center GERAD in Montréal in September 2017.

EARIE 2017 in Maastricht

Serhat Gezer will present his joint work with Herbert Dawid on “Delaying Product Innovation in a Duopoly: A Strategic Dynamic Analysis” at the 44th Annual Conference of the European Association for Research in Industrial Economics (EARIE).

New Paper Accepted in Journal of Evolutionary Economics

Dawid H., Harting Ph., van der Hoog S., Neugart M, 2017 "A Heterogeneous Agent Macroeconomic Model for Policy Evaluation: Improving Transparency and Reproducibility" , Journal of Evolutionary Economics

ETACE at the CEF 2017

ETACE members will actively participate in  the 23rd International Conference on Computing in Economics and Finance (CEF 2017) in New York City (http://comp-econ.org/CEF_2017/). Herbert Dawid and Philipp Harting offer a Pre-Conference Workshop on 'Agent-based Macroeconomics' on June 27. Herbert Dawid, Philipp Harting and Sander van der Hoog will also each present a research paper during the conference.

Plenary Lecture

Herbert Dawid will give an invited plenary lecture about 'Policy Analysis in a Multi-Regional Agent-Based Framework' on June 22nd at the 6th World Congress of the International Microsimulation Association in Torino.

ETACE participates in new SFB 1283

Starting with July 2017 the collaborative research center (SFB 1283) 'Taming uncertainty and profiting from randomness and low regularity in analysis, stochastics and their applications' will be funded by the German Science Foundation. Herbert Dawid will participate in the SFB as Principal Investigator of the project 'Innovation dynamics under market uncertainty and financial constraints'.

New Article Accepted in Small Business Economics

Colombo, L., Dawid., H., Piva, M., Vivarelli, M., 2017  "Does Easy Start-Up Formation Hamper Incumbents R&D Investments?" Small Business Economics (Accepted)

New DFG Project

The German Science Foundation has decided to provide funding for the research project "The Role of Professional Networks and Firm Hierarchies for Individual Careers and Wage Inequality" with Anna Zaharieva and Herbert Dawid as Co-PIs. The project will run for three years and combine search and matching theory with agent-based simulations to analyse the role of professional networks and firm hierarchies for individual wage dynamics, income inequality and intergenerational mobility.

Paper accepted

in Labour Economics special issue in honour of the Nobel Laureate Christopher Pissarides "On the Optimal Diversification of Social Networks in Frictional Labour Markets with Occupational Mismatch", Anna Zaharieva

New Article Published in Pacific Economic Review

Dawid, H., Zou, B. (2017) Foreign direct investment with endogenous technology choice, Pacific Economic Review; 22; 3-22

Workshop on Validation Methods for Agent-Based Models

Sander van der Hoog is co-organizing a workshop at the School of Economics of the University of Kent (UK), held on 24-26 April 2017.

For details and the programme schedule, see: https://www.kent.ac.uk/economics/research/MaGHiC/events/workshop-apr17.html

Paper accepted in the Journal of Public Economic Theory

title "Optimal policy and the role of social contacts in a search model with heterogeneous workers", authors: Anna Zaharieva and Juliia Stupnytska

“Formal search and referrals from a firm's perspective"

Anna Zaharieva will present a paper dealing with the a. m. topic at the Annual Search and Matching Conference in Barcelona on May, 31  - June, 2  2017.

Article Accepted in Review of International Economics

Dawid, H., Harting, P., Neugart, M. (2017) Fiscal Transfers and Regional Economic Growth; Review of International Economics (accepted)

New ZiF Research Group

Anna Zaharieva together with two colleagues Ursula Mense-Petermann (Faculty of Sociology) and Thomas Welskopp (Faculty of History) successfully applied for an interdisciplinary ZiF Research Group “In Search of the Global Labour Market”.

ETACE Members Coordinate Marie Curie International Traning Network

Starting in March 2017 Bielefeld University will coordinate the Marie Skłodowska-Curie European Training Network
ExSIDE (Expectation and Social Influence Dynamics in Economics). 15 doctoral students will study and do research within the program, which involves 8 European Universities and is funded by the European Commission with 3.8 Mio. Euro. Apart from the Network coordinator Herbert Dawid also ETACE member Anna Zaharieva will be involved in the program as doctoral supervisor.
For more information see: