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People I Know: Workplace Networks and Job Search Outcomes

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  • Federico Cingano

    ()
    (Bank of Italy - Economic Research Department)

  • Alfonso Rosolia

    ()
    (Bank of Italy - Economic Research Department)

Abstract

We examine the role of information networks in job-search outcomes of displaced individuals. We draw on longitudinal Social Security records covering the universe of worker-firm matches in a tight labor market in Northern Italy. Unlike previous research, we focus on workplace networks whose labor market attributes we are able to describe extensively. A workplace network is defined as all coworkers a displaced individual worked with prior to displacement. Estimates of network effects are thus affected by omitted variable bias if the labor market sorts workers across firms along relevant determinants of search outcomes and network characteristics or if past coworkers are exposed to the same shocks. The empirical strategy accounts for these possibilities by comparing subsequent outcomes of workers displaced by the same firm; in addition, we exploit the longitudinal dimension to develop controls for potential residual within-firm heterogeneity. In particular, we control for pre-displacement wages and employment status as well as descriptions of pre-displacement firms and their workforce. ContactsÂ’ labor market attributes have a significant effect on a variety of job search outcomes. Employed contacts significantly increase the probability of re-employment. They are more effective if they experienced a recent job change and when geographically and technologically closer to the displaced. Stronger ties and lower competition for the available information also speed up re-employment. While largely irrelevant for unemployment duration, contactsÂ’ quality is a significant determinant of entry wages and subsequent job stability.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 600.

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Date of creation: Sep 2006
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Handle: RePEc:bdi:wptemi:td_600_06

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Keywords: Unemployment; Wages; Job Stability; Social Networks;

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References

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  1. The Liz Taylor economic policy
    by chris dillow in Stumbling and Mumbling on 2011-04-01 13:30:53
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Cited by:
  1. Ponzo, Michela & Scoppa, Vincenzo, 2009. "The Use of Informal Networks in Italy: Efficiency or Favoritism?," MPRA Paper 17281, University Library of Munich, Germany.
  2. Andrea Brandolini, 2007. "Measurement of income distribution in supranational entities: the case of the European Union," Temi di discussione (Economic working papers) 623, Bank of Italy, Economic Research and International Relations Area.
  3. Lorenzo Cappellari & Konstantinos Tatsiramos, 2011. "Friends’ Networks and Job Finding Rates," Discussion Papers in Economics 11/40, Department of Economics, University of Leicester.

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