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Coworker Networks in the Labour Market

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  • Albrecht Glitz

Abstract

This paper studies the effect of coworker-based networks on individual labour market outcomes. I analyse how the provision of labour market relevant information by former coworkers affects the employment probabilities and, if hired, the wages of male workers who have previously become unemployed as the result of an establishment closure. To identify the causal effect of an individual worker’s network on labour market outcomes, I exploit exogenous variation in the strength of these networks that is due to the occurrence of mass-layoffs in the establishments of former coworkers. The empirical analysis is based on administrative data that comprise the universe of workers employed in Germany between 1980 and 2001. The results suggest a strong positive effect of a higher employment rate in a worker’s network of former coworkers on his re-employment probability after displacement: a 10 percentage point increase in the prevailing employment rate in the network increases the re-employment probability by 7.5 percentage points. In contrast, there is no evidence of a statistically significant effect on wages.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4250.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4250

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Keywords: networks; labour markets; employment; wages;

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  1. Dahl, Gordon B. & Løken, Katrine V. & Mogstad, Magne, 2012. "Peer Effects In Program Participation," Working Papers in Economics, University of Bergen, Department of Economics 12/12, University of Bergen, Department of Economics.
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  3. Christian Dustmann & Albrecht Glitz & Uta Schoenberg, 2011. "Referral-based Job Search Networks," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2011012, Norface Research Programme on Migration, Department of Economics, University College London.
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  5. Antoni Calvó-Armengol & Matthew O. Jackson, 2003. "Networks in Labor Markets: Wage and Employment Dynamics and Inequality," Working Papers 55, Barcelona Graduate School of Economics.
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  8. Åslund, Olof & Edin, Per-Anders & Fredriksson, Peter, 2001. "Ethnic Enclaves and the Economic Success of Immigrants - Evidence from a Natural Experiment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2729, C.E.P.R. Discussion Papers.
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  10. Lorenzo Cappellari & Konstantinos Tatsiramos, 2011. "Friends’ Networks and Job Finding Rates," Discussion Papers in Economics, Department of Economics, University of Leicester 11/40, Department of Economics, University of Leicester.
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  13. Anna Piil Damm, 2012. "Neighborhood Quality and Labor Market Outcomes: Evidence from Quasi-Random Neighborhood Assignment of Immigrants," Economics Working Papers, School of Economics and Management, University of Aarhus 2012-18, School of Economics and Management, University of Aarhus.
  14. Lori A. Beaman, 2012. "Social Networks and the Dynamics of Labour Market Outcomes: Evidence from Refugees Resettled in the U.S," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 128-161.
  15. Marco Caliendo & Ricarda Schmidl & Arne Uhlendorff, 2011. "Social networks, job search methods and reservation wages: evidence for Germany," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 32(7), pages 796-824, November.
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Cited by:
  1. Tommaso Colussi, 2013. "Migrant Networks and Job Search Outcomes: Evidence from Displaced Workers," Working Papers, Queen Mary, University of London, School of Economics and Finance 706, Queen Mary, University of London, School of Economics and Finance.
  2. Saygin, Perihan Ozge & Weber, Andrea & Weynandt, Michèle, 2014. "Coworkers, Networks, and Job Search Outcomes," IZA Discussion Papers 8174, Institute for the Study of Labor (IZA).

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