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Neighbors and Co-Workers: The Importance of Residential Labor Market Networks

  • Judith Hellerstein
  • Melissa McInerney
  • David Neumark

We specify and implement a test for the importance of network effects in determining the establishments at which people work, using recently-constructed matched employer-employee data at the establishment level. We explicitly measure the importance of network effects for groups broken out by race, ethnicity, and various measures of skill, for networks generated by residential proximity. The evidence indicates that labor market networks play an important role in hiring, more so for minorities and the less-skilled, especially among Hispanics, and that labor market networks appear to be race-based.

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File URL: ftp://ftp2.census.gov/ces/wp/2009/CES-WP-09-01.pdf
File Function: First version, 2009
Download Restriction: no

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 09-01.

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Length: 47 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:cen:wpaper:09-01
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  1. Ellison, G. & Glaeser, E.L., 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Working papers 94-27, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Per-Anders Edin & Peter Fredriksson & Olof Åslund, 2003. "Ethnic Enclaves and the Economic Success of Immigrants—Evidence from a Natural Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 329-357.
  3. Giorgio Topa & Stephen Ross & Patrick Bayer, 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Working Papers 05-23, Center for Economic Studies, U.S. Census Bureau.
  4. Judith Hellerstein & David Neumark & Melissa McInerney, 2007. "Spatial Mismatch or Racial Mismatch?," Working Papers 07-16, Center for Economic Studies, U.S. Census Bureau.
  5. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, March.
  6. Bayer, Patrick & Fang, Hanming & McMillan, Robert, 2014. "Separate when equal? Racial inequality and residential segregation," Journal of Urban Economics, Elsevier, vol. 82(C), pages 32-48.
  7. Harry J. Holzer, 1998. "Why Do Small Establishments Hire Fewer Blacks Than Large Ones?," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 896-914.
  8. Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 27-46, January.
  9. Ian Schmutte, 2010. "Job Referral Networks and the Determination of Earnings in Local Labor Markets," Working Papers 10-40, Center for Economic Studies, U.S. Census Bureau.
  10. Judith Hellerstein & David Neumark, 2004. "Workplace Segregation in the United States: Race, Ethnicity, and Skill," PPIC Working Papers 2004.05, Public Policy Institute of California.
  11. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-18, December.
  12. Edin, P.-A. & Fredriksson, P. & Aslund, O., 2000. "Evidence from a Natural Experiment," Papers 2000-21, Uppsala - Working Paper Series.
  13. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
  14. Moscarini, Giuseppe & Thomsson, Kaj, 2006. "Occupational and Job Mobility in the US," Working Papers 19, Yale University, Department of Economics.
  15. Krishna Patel & Francis Vella, 2013. "Immigrant Networks and Their Implications for Occupational Choice and Wages," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1249-1277, October.
  16. repec:adr:anecst:y:2033:i:71-72 is not listed on IDEAS
  17. Judith K. Hellerstein & David Neumark, 2002. "Ethnicity, Language, and Workplace Segregation: Evidence from a New Matched Employer-Employee Data Set," NBER Working Papers 9037, National Bureau of Economic Research, Inc.
  18. Simon, Curtis J & Warner, John T, 1992. "Matchmaker, Matchmaker: The Effect of Old Boy Networks on Job Match Quality, Earnings, and Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 306-30, July.
  19. Topa, Giorgio, 1997. "Social Interactions, Local Spillovers and Unemployment," Working Papers 97-17, C.V. Starr Center for Applied Economics, New York University.
  20. Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
  21. Susan Clampet-Lundquist & Greg J.Princeton University Duncan & Kathryn Edin & Jeffrey R. Kling & Kristin Turney, 2006. "Neighborhood Effects on Barriers to Employment: Results From a Randomized Housing Mobility Experiment in Baltimore," Working Papers 890, Princeton University, Department of Economics, Industrial Relations Section..
  22. David M. Cutler & Edward L. Glaeser, 1997. "Are Ghettos Good or Bad?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 827-872.
  23. Bruce A. Weinberg & Patricia B. Reagan & Jeffrey J. Yankow, 2004. "Do Neighborhoods Affect Hours Worked? Evidence from Longitudinal Data," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 891-924, October.
  24. S. Illeris & G. Akehurst, 2001. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 21(1), pages 1-4, January.
  25. repec:pri:indrel:dsp01cr56n0997 is not listed on IDEAS
  26. Kaivan Munshi, 2003. "Networks in the Modern Economy: Mexican Migrants in the U. S. Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 118(2), pages 549-599.
  27. Cingano, Federico & Rosolia, Alfonso, 2008. "People I Know: Job Search and Social Networks," CEPR Discussion Papers 6818, C.E.P.R. Discussion Papers.
  28. Walter S. McManus, 1990. "Labor Market Effects of Language Enclaves: Hispanic Men in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 228-252.
  29. H. J. Holzer, . "Why do small establishments hire fewer blacks than large ones," Institute for Research on Poverty Discussion Papers 1119-97, University of Wisconsin Institute for Research on Poverty.
  30. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics," Introductory Chapters, in: Robert Gibbons & John Roberts (ed.), The Handbook of Organizational Economics Princeton University Press.
  31. repec:adr:anecst:y:2003:i:71-72:p:02 is not listed on IDEAS
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