Abstract (may include machine translation)
Social networks are an important channel of information transmission in the labor market.
This paper studies the mechanisms by which social networks have an impact on labor market
outcomes of displaced workers. We base our analysis on administrative records for the
universe of private sector employment in Austria where we define work-related networks
formed by past coworkers. To distinguish between mechanisms of information transmission,
we adopt two different network perspectives. From the job-seeker's perspective we analyze
how network characteristics affect job finding rates and wages in the new jobs. Then we
switch to the perspective of the hiring firm and analyze which types of displaced workers get
hired by firms that are connected to a closing firm via past coworker links. Our results
indicate that employment status and the firm types of former coworkers are crucial for the job
finding success of their displaced contacts. Moreover, 21% of displaced workers find a new
job in a firm that is connected to their former workplace. Among all workers that were
displaced from the same closing firm those with a direct link to a former coworker are twice
as likely to be hired by the connected firm than workers without a link. These results highlight
the role of work related networks in the transmission of job information and strongly suggest
that job referrals are an important mechanism.
This paper studies the mechanisms by which social networks have an impact on labor market
outcomes of displaced workers. We base our analysis on administrative records for the
universe of private sector employment in Austria where we define work-related networks
formed by past coworkers. To distinguish between mechanisms of information transmission,
we adopt two different network perspectives. From the job-seeker's perspective we analyze
how network characteristics affect job finding rates and wages in the new jobs. Then we
switch to the perspective of the hiring firm and analyze which types of displaced workers get
hired by firms that are connected to a closing firm via past coworker links. Our results
indicate that employment status and the firm types of former coworkers are crucial for the job
finding success of their displaced contacts. Moreover, 21% of displaced workers find a new
job in a firm that is connected to their former workplace. Among all workers that were
displaced from the same closing firm those with a direct link to a former coworker are twice
as likely to be hired by the connected firm than workers without a link. These results highlight
the role of work related networks in the transmission of job information and strongly suggest
that job referrals are an important mechanism.
| Original language | English |
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| Place of Publication | Bonn |
| Publisher | IZA Institute of Labor Economics |
| State | Published - 2014 |
Publication series
| Name | IZA Discussion Paper ; 8174. |
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