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

Listed author(s):
  • Ian M. Schmutte

Despite their documented importance in the labor market, little is known about how workers use social networks to find jobs and their resulting effect on earnings. I use geographically detailed US employer-employee data to infer the role of social networks in connecting workers to jobs in high-paying firms. To identify social interactions in job search, I exploit variation in social network quality within small neighborhoods. Workers are more likely to change jobs, and more likely to move to a higher-paying firm, when their neighbors are employed in high-paying firms. Furthermore, local referral networks help match high-ability workers to high-paying firms.

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File URL: http://dx.doi.org/10.1086/677389
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File URL: http://dx.doi.org/10.1086/677389
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 33 (2015)
Issue (Month): 1 ()
Pages: 1-32

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Handle: RePEc:ucp:jlabec:doi:10.1086/677389
Contact details of provider: Web page: http://www.journals.uchicago.edu/JOLE/

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