Social and Household Networks in Sri Lanka: Does Networking Create a Disparity in Employment Outcomes

Abstract

This paper estimates the impact of social and household networks on employment outcomes in Sri Lanka.The results indicate that social networks, measured by language choice and locality, improve employment outcomes by 0.01%-0.89%. Additionally, ethnicity and language fluency have significant effects on social networks in Sri Lanka. Household networks, which is measured as the count of employed and unemployed individuals in a household, improve employment outcomes by 0.9%-6.2%. However, when household networks are small, employment may be restricted, an occurrence termed as a networking trap. This networking trap predominantly affects low-income households (82%), thereby, impeding poverty alleviation. This paper suggests a policy mechanism to ease the networking trap for low-income households, which leads to an increase in income and a reduction in poverty.