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Is There a Preferential Treatment for Locals in the Labor Market? Evidence from Takeovers


  • Colussi, Tommaso

    () (Catholic University Milan)

  • Romano, Livio

    () (Confindustria)


This work analyzes the extent to which local social networks affect workers' labor market outcomes and firms' economic performance. By exploiting variations in firms' ownership generated by takeovers, we find that belonging to the same community of origin as the new employer significantly increases an employee's job retention probability. Finally, we show that the share of local employees retained after the takeover is negatively associated with the probability of closure of the acquiring firm.

Suggested Citation

  • Colussi, Tommaso & Romano, Livio, 2016. "Is There a Preferential Treatment for Locals in the Labor Market? Evidence from Takeovers," IZA Discussion Papers 10418, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10418

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    References listed on IDEAS

    1. Andrea Weber & Christine Zulehner, 2014. "Competition And Gender Prejudice: Are Discriminatory Employers Doomed To Fail?," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 492-521, April.
    2. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 917-962.
    3. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-145, March.
    4. David Marmaros & Bruce Sacerdote, 2006. "How Do Friendships Form?," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 79-119.
    5. Leandro D’Aurizio & Livio Romano, 2011. "Family Firms and the Great Recession: Out of Sight, Out of Mind?," Economics Working Papers ECO2011/28, European University Institute.
    6. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2009. "Social Connections and Incentives in the Workplace: Evidence From Personnel Data," Econometrica, Econometric Society, vol. 77(4), pages 1047-1094, July.
    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. Laura Giuliano & David I. Levine & Jonathan Leonard, 2011. "Racial Bias in the Manager-Employee Relationship: An Analysis of Quits, Dismissals, and Promotions at a Large Retail Firm," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 26-52.
    9. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2008. "Social capital in the workplace: Evidence on its formation and consequences," Labour Economics, Elsevier, vol. 15(4), pages 724-748, August.
    10. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
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    More about this item


    takeovers; local social networks; social capital; firm behavior;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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