The Recruitment Paradox: Network Recruitment, Structural Position, and East German Market Transition

Economic institutions structure links between labor-market informality and social stratification. The present study explores how periods of institutional change and post-socialist market transition alter network-based job finding, in particular informal recruitment. We highlight how market transitions affect both the prevalence and distribution of network-based recruitment channels: open-market environments reduce informal recruitment’s prevalence but increase its association with high wages. We test these propositions using the case of the former East Germany’s market transition and a comparison with West Germany’s more stable institutional environment. Following transition, workers in lower tiers increasingly turned toward formal intermediaries, active employee search, and socially “disembedded” matches. Meanwhile, employers actively recruited workers into higher-wage positions. Implications for market transition theory and post-socialist stratification are discussed.