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Economics Seminar Series
Economics Seminar Series
Nov 25 2012 3pm-4:15pm
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Speaker: George Naufal, American University of Sharjah, U.A.E

Title: 'Social Networks, Conflict and Wages: The Case of Iraq'

Abstract: The goal of this paper is to present an econometric evaluation of the effects of social networks, as a primary job attainment method, on wages in the Middle East. Social networks, defined here as the use of family and friends in securing the current job, can be positively or negatively associated with earnings depending on the relative strength of the information, productivity, and job mismatch effects. We proceed to test this hypothesis by presenting evidence from an endogenous switching model (ESM) that accounts for endogeneity in the choice of job search channel. An ESM permits more flexibility by allowing controls to have varying effects on wages under different job search methods. Using Iraq Household Socioeconomic Survey and focusing on males, we find those who obtained their current job through social networks enjoy a wage premium relative to others who did not, hinting to important information effects. Further, we take into account conflict in Iraq by controlling for number of casualties using data from the Iraq Body Count Project. Preliminary results suggest that the intensity of the conflict (reflected by higher number of casualties) only matters for the wages of those who did not use social networks (positive impact). In other terms, compensating variation does not apply for those who resorted to social networks. In light of weak labor markets in the region and the rise of conflict incidence (due to the latest events), the findings in this paper are of significant importance for policy makers.

About the speaker: George Naufal is an Assistant Professor of Economics at The American University of Sharjah and a research fellow at the Institute for the Study of Labor (IZA). His primary research includes migration and its consequences mainly the impact of remittances on the remitting countries. He has published widely on the Middle East and North Africa region, focusing primarily on the Gulf countries. Besides his academic involvement, he is a consultant on local and regional issues. He has a PhD in Economics from Texas A&M University.
Emer Cogan
Faculty Affairs