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When strong ties are strong Networks and youth labor market entry

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  • Kramarz, Francis

    ()
    (Center for Research in Economics and Statistics (CREST), CEPR, IZA, IFAU)

  • Nordström Skans, Oskar

    ()
    (Uppsala Center for Labor Studies)

Abstract

The conditions under which young workers find their first real post-graduation jobs are both very important for the young’s future careers and insufficiently known given their public policy implications. To study these conditions, and in particular the role played by networks, we use a Swedish population-wide linked employer-employee data set of graduates from all levels of schooling which includes detailed information on family ties, neighborhoods, schools, and class composition over a period covering high as well as low unemployment years. We find that strong social ties (parents) are an important determinant of where young workers find their first job. This remarkably robust effect is estimated controlling for all confounding factors related to time, location, education, occupation, and the interaction of these. The effect is larger if the graduate’s position is “weak” (low education) or during high unemployment years, a pattern which does not emerge when analyzing the role of weak ties (neighbors or friends as measured using classmates and their parents). On the hiring side, by contrast, the effects are larger if the parent’s position is “strong” (e.g. by tenure or wage). We find no evidence of substitution in recruitment over time and fields induced by “family ties hires”. However, we do find that, just after their child is hired in their plant, parents experience a sharp drop in their wage growth. Overall, our results show that strong (family) ties are more important in the job finding process of young workers in weak positions than those weak ties usually measured in the literature (neighbors, in particular), suggesting that labor market experience and education are essential conditions for weak ties to be strong.

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Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Labor Studies with number 2011:18.

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Length: 69 pages
Date of creation: 27 Oct 2011
Date of revision:
Handle: RePEc:hhs:uulswp:2011_018

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
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Web page: http://www.nek.uu.se/
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Keywords: Weak ties; social networks; youth employment;

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References

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  1. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  2. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  3. Jonathan Conning, 2000. "Monitoring by Peers or by Delegates? Joint Liability Loans under Moral Hazard," Department of Economics Working Papers 2000-07, Department of Economics, Williams College.
  4. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
  5. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
  6. Corak, Miles & Piraino, Patrizio, 2010. "Intergenerational Earnings Mobility and the Inheritance of Employers," IZA Discussion Papers 4876, Institute for the Study of Labor (IZA).
  7. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
  8. Åslund, Olof & Nordström Skans, Oskar, 2005. "Will I see you at work? Ethnic workplace segregation in Sweden 1985–2002," Working Paper Series 2005:24, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. Lorenzo Cappellari & Konstantinos Tatsiramos, 2010. "Friends' Networks and Job Finding Rates," CESifo Working Paper Series 3243, CESifo Group Munich.
  10. Aslund, Olof & Hensvik, Lena & Nordström Skans, Oskar, 2009. "Seeking Similarity: How Immigrants and Natives Manage at the Labor Market," IZA Discussion Papers 4640, Institute for the Study of Labor (IZA).
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  12. Giovanni Millo & Giacomo Pasini, 2010. "Does Social Capital Reduce Moral Hazard? A Network Model for Non-Life Insurance Demand," Fiscal Studies, Institute for Fiscal Studies, vol. 31(3), pages 341-372, 09.
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Blog mentions

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  1. La importancia de tener conexiones (¡y también buenos datos!)
    by Manuel Bagues in Nada Es Gratis on 2013-09-26 05:00:50
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Cited by:
  1. Hensvik, Lena & Nordström Skans, Oskar, 2013. "Social networks, employee selection and labor market outcomes," Working Paper Series 2013:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Anna Zaharieva, 2011. "Social Welfare and Wage Inequality in Search Equilibrium with Personal Contacts," Working Papers 459, Bielefeld University, Center for Mathematical Economics.
  3. Venke Furre Haaland & Mari Rege & Kjetil Telle & Mark Votruba, 2014. "The intergenerational transfer of the employment gender gap," Discussion Papers 767, Research Department of Statistics Norway.
  4. Berardi, N., 2013. "Social networks and wages in Senegal’s formal sector," Working papers 429, Banque de France.
  5. Carla Calero & Veronica Gonzales & Yuri Soares & Jochen Kluve & Carlos Henrique Corseuilt, 2014. "Can Arts-Based Interventions Enhance Labor Market Outcomes among Youth? Evidence from a Randomized Trial in Rio de Janeiro," Ruhr Economic Papers 0486, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  6. Yuliia Stupnytska, 2014. "Explaining the U-Shape of the Referral Hiring Pattern in a Search Model with Heterogeneous Workers," Working Papers 511, Bielefeld University, Center for Mathematical Economics.
  7. Durante, Ruben & Labartino, Giovanna & Perotti, Roberto, 2011. "Academic Dynasties: Decentralization and Familism in the Italian Academia," CEPR Discussion Papers 8645, C.E.P.R. Discussion Papers.

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