Research in sociology and economics points to an important role for social networks in labour markets. Social contacts mediate propagation of rich and reliable information among individuals and thus help workers to find jobs, and employers to find employees. Recent theoretical advances show that, for agents connected through networks, employment is positively correlated across time and agents, unemployment exhibits duration dependence, and inequality can persist. Recent empirical findings underscore nonlinearities in social interactions and potentially important effects of self-selection. Socioeconomic characteristics can explain substantial spatial dependence in unemployment.