Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes

44 Pages Posted: 25 May 2006 Last revised: 12 Aug 2010

See all articles by Patrick J. Bayer

Patrick J. Bayer

Duke University - Department of Economics; National Bureau of Economic Research (NBER)

Stephen L. Ross

University of Connecticut - Department of Economics

Giorgio Topa

Federal Reserve Bank of New York

Multiple version iconThere are 2 versions of this paper

Date Written: January 2005

Abstract

We use a novel research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby blocks. We find evidence of significant social interactions operating at the block level: residing on the same versus nearby blocks increases the probability of working together by over 33 percent. The results also indicate that this referral effect is stronger when individuals are similar in socio-demographic characteristics (e.g., both have children of similar ages) and when at least one individual is well attached to the labor market. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, having determined the characteristics of a pair of individuals that lead to an especially strong referral effect, we provide evidence that the increased availability of neighborhood referrals has a significant impact on a wide range of labor market outcomes including labor force participation, hours and earnings.

Suggested Citation

Bayer, Patrick J. and Ross, Stephen L. and Topa, Giorgio, Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes (January 2005). NBER Working Paper No. w11019. Available at SSRN: https://ssrn.com/abstract=645261

Patrick J. Bayer (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Stephen L. Ross

University of Connecticut - Department of Economics ( email )

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Storrs, CT 06269-1063
United States
860-486-3533 (Phone)
860-486-4463 (Fax)

Giorgio Topa

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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