Social Networks and the Dynamics of Labour Market Outcomes: Evidence from Refugees Resettled in the U.S

This paper examines the dynamic implications of social networks for the labour market outcomes of refugees resettled in the U.S. A theoretical model of job information transmission shows that the relationship between social network size and labour market outcomes is heterogeneous and depends on the vintage of network members: an increase in network size can negatively impact some cohorts in a network while benefiting others. To test this prediction, I use new data on political refugees resettled in the U.S. and exploit the fact that these refugees are distributed across cities by a resettlement agency, precluding individuals from sorting. The results indicate that an increase in the number of social network members resettled in the same year or one year prior to a new arrival leads to a deterioration of outcomes, while a greater number of tenured network members improves the probability of employment and raises the hourly wage. Copyright 2012, Oxford University Press.