Networks, Hiring, and Attainment: Evidence from Law Firm Dissolutions

Abstract:     
Social networks facilitate hiring by reducing information asymmetries between individual job candidates and employing organizations. Causal effects of network contacts on organizational hiring and individual attainment are unclear, though, because networks probably influence both the likelihood that an individual changes employers and the intraprofessional status attained by doing so. In this study, I theorize how prior education and prior employment contacts both alleviate information asymmetries to influence hiring but differentially influence attainment. Leveraging the unexpected dissolutions of six U.S. law firms as an exogenous shock to mobility, I analyze 1,426 lawyers’ post-dissolution labor market outcomes. Results demonstrate that both law school alumni and co-worker contacts influence hiring. Correcting for covariate imbalance and individual propensities to mobilize these two network contacts suggests that status attainment is decreasing with reliance upon prior education contacts and increasing with reliance upon prior employment contacts. Implications for studies of networks and inequality are discussed.

Number of Pages in PDF File: 57

Keywords: networks, attainment, law firms, careers, mobility

JEL Classification: J44, J63, L84, M51

working papers series