Do neighbors help finding a job? Social networks and labor market outcomes after plant closures

This paper investigates whether the employment status of neighbors influences the employment probability of workers who lost their job due to a plant closure, and the channels through which this occurs. Combining rich spatial information with administrative records, we find that a 10 percentage points higher neighborhood employment rate increases the probability of finding a job by 1.9%. Displaced workers not only benefit from neighborhood networks in terms of higher earnings and longer job stability but they are also more likely to find a job at the plant of a neighbor. These results indicate that neighbors refer workers to employers and that social norms are less likely to play a role.