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Job Referral Networks and the Determination of Earnings in Local Labor Markets

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  • Ian Schmutte

Abstract

Referral networks may affect the efficiency and equity of labor market outcomes, but few studies have been able to identify earnings effects empirically. To make progress, I set up a model of on-the-job search in which referral networks channel information about high-paying jobs. I evaluate the model using employer-employee matched data for the U.S. linked to the Census block of residence for each worker. The referral effect is identified by variations in the quality of local referral networks within narrowly defined neighborhoods. I find, consistent with the model, a positive and significant role for local referral networks on the full distribution of earnings outcomes from job search.

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File URL: ftp://ftp2.census.gov/ces/wp/2010/CES-WP-10-40.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 10-40.

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Length: 37 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:cen:wpaper:10-40

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Keywords: Social Interactions; Informal Hiring Networks; Wage Variation; Neighborhood Effects;

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References

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Citations

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Cited by:
  1. Lorenzo Cappellari & Konstantinos Tatsiramos, 2010. "Friends’ Networks and Job Finding Rates," DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro ieil0059, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  2. Judith K. Hellerstein & Mark J. Kutzbach & David Neumark, 2013. "Do Labor Market Networks Have An Important Spatial Dimension?," NBER Working Papers 18763, National Bureau of Economic Research, Inc.
  3. Judith K. Hellerstein & Melissa McInerney & David Neumark, 2010. "Neighbors and Co-Workers: The Importance of Residential Labor Market Networks," Global COE Hi-Stat Discussion Paper Series gd09-132, Institute of Economic Research, Hitotsubashi University.
  4. Christian Dustmann & Albrecht Glitz & Uta Schönberg, 2011. "Referral-based Job Search Networks," CReAM Discussion Paper Series 1114, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Koedel, Cory & Tyhurst, Eric, 2012. "Math skills and labor-market outcomes: Evidence from a resume-based field experiment," Economics of Education Review, Elsevier, vol. 31(1), pages 131-140.
  6. Hellerstein, Judith K. & Kutzbach, Mark J. & Neumark, David, 2014. "Do labor market networks have an important spatial dimension?," Journal of Urban Economics, Elsevier, vol. 79(C), pages 39-58.
  7. Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2011. "Friends’ networks and job finding rates," ISER Working Paper Series 2011-21, Institute for Social and Economic Research.

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