Creating Connections for the Disadvantaged: Networks and Labor Market Intermediaries at the Hiring Interface

Abstract

Scholars interested in race inequality have been particularly attracted to network accounts of the stratifying effects of social networks in the labor market. A recurring theme in policy‐oriented research on poverty is that institutional connections can be engineered to create connections between job seekers and employers in ways that parallel social network processes. Yet, there has been little empirical research on how such linkages work across the various steps of the recruitment, screening, and hiring process. We examine how labor market intermediaries can serve as functional substitutes for social network processes for disadvantaged workers. Consistent with policy arguments about the desirability of creating connections to employers, applicants who are connected to this employer via formal labor market intermediaries exhibit a number of the advantages experienced by those applying to the firm via social network ties. Across the two stages of the hiring process, the net result is that applicants with such “created connections” are more likely to be offered jobs, and ultimately hired than other groups of applicants. We conclude with a discussion of the implications of these findings for research on labor market intermediation and other forms of brokerage and the feasibility of policy efforts to “create connections” in the labor market.

Keywords: Race, poverty, networks, brokerage, intermediaries, labor markets

JEL Classification: M51, M12, D63