JOB ALLOCATION IN TRANSITION SOCIETY: THE ROLE OF SOCIAL NETWORKS IN ESTONIA
JOB ALLOCATION IN TRANSITION SOCIETY: THE ROLE OF SOCIAL NETWORKS IN ESTONIA

Summary/Abstract: This paper’s key questions evolve around the extent to which rational markets prove to be embedded within social structure. Exploring representative quantitative datasets, we show that the role of informal ways in obtaining jobs in Estonia remained as high as it was in 1989. During the period 1989-1999, while the new institutions were still in development, social networks helped coping with the high level of competition in labour market in times of higher unemployment. From 2000 onwards, with institutions already crystallised, the efficiency of social ties in finding a job was higher during the periods of stable growth and somewhat lower during the times of economic hardships. The newly emerged formal institutions for job allocation seem to have given advantages to specific groups in the labour market – most systematically those with higher education. Groups that are more likely obtain their jobs through their social networks are the least competitive ones in the labour market (e.g. Non-Estonians, young people, people with less than higher education), so the social networks have been playing a compensatory role with regards to the inefficiencies of other, missing or unfavourable institutions. We see the use of social networks as an indicator for the possibility and importance of social life outside the markets, and for the subordination of the economic rationale to social.

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