Informal Contacts and Job Tenure: An Empirical Investigation in Ghana

Abstract

This study was undertaken mainly to test the hypothesis that the employer-employee match is improved when workers resort to informal contacts in the job search process. Empirical literature on the impact of the latter search medium on tenure though limited concludes that jobs obtained through the help of a worker’s friends and relatives last longer. Findings from this study are however at variant with this strand of economic literature. The study which used a sample of 150 formal sector workers drawn from specific subsectors in the service sector and adopted a Cox proportional hazard model found that the first jobs obtained by workers through the help of their friends and relatives as against formal means (direct applications, newspaper adverts and recruitment agencies) do not last long. This negative relationship loses its relevance when controls are made for individual and firm-level characteristics. A further disaggregating of the informal means into male and females contacts produced mixed results. Shorter tenure is observed for jobs acquired through female relatives and friends as compared to those obtained through informal males and formal means. Generalizations from this study should be done with care due to the small sample size and limitation of the analysis to the first jobs of sampled workers. With limited studies on the relationships between social networks in the job search process and post-hire outcomes in Sub-Saharan Africa (wages, job satisfaction, job tenure among others), this exploratory study provides some foundation for further research.