Do Neighbors Help Finding a Job? Social Networks and Labor Market Outcomes after Plant Closures
35 Pages Posted: 8 Mar 2016 Last revised: 23 Sep 2016
Date Written: September 22, 2016
Social networks may affect individual workers' labor market outcomes. Using rich spatial data from administrative records, we analyze whether neighbors' employment status influences an individual worker's employment probability after plant closure and, if hired, his wage. Our findings suggest that a 10 percentage point higher neighborhood employment rate increases the probability of having a job after six months by 0.9 percentage points and daily earnings by 1.7 percent. The neighborhood effect seems not to be driven by social norms but information transmission via neighborhoods and, additionally, via former co-worker networks.
Keywords: social networks, job search, neighborhood, employment, wages, plant closures
JEL Classification: J63, J64, R23
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