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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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  1. Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December.
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Citations

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Cited by:
  1. Cory Koedel & Eric Tyhurst, 2010. "Math Skills and Labor-Market Outcomes: Evidence from a Resume-Based Field Experiment," Working Papers 1013, Department of Economics, University of Missouri, revised 31 May 2011.
  2. Judith K. Hellerstein & Melissa P. McInerney & David Neumark, 2010. "Neighbors And Co-Workers:The Importance Of Residential Labor Market Networks," Working Papers 101, Department of Economics, College of William and Mary.
  3. Lorenzo Cappellari & Konstantinos Tatsiramos, 2010. "Friends' Networks and Job Finding Rates," CESifo Working Paper Series 3243, CESifo Group Munich.
  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. repec:ese:iserwp:2011-21 is not listed on IDEAS
  6. Judith K. Hellerstein & Mark J. Kutzbach & David Neumark, 2013. "Do labor market networks have an important spatial dimension?," Working Papers 2013/20, Institut d'Economia de Barcelona (IEB).

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