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Coworker Networks in the Labour Market

  • Glitz, Albrecht


    (Universitat Pompeu Fabra)

This paper studies the effect of coworker-based networks on individual labour market outcomes. I analyse how the provision of labour market relevant information by former coworkers affects the employment probabilities and, if hired, the wages of male workers who have previously become unemployed as the result of an establishment closure. To identify the causal effect of an individual worker's network on labour market outcomes, I exploit exogenous variation in the strength of these networks that is due to the occurrence of mass-layoffs in the establishments of former coworkers. The empirical analysis is based on administrative data that comprise the universe of workers employed in Germany between 1980 and 2001. The results suggest a strong positive effect of a higher employment rate in a worker's network of former coworkers on his re-employment probability after displacement: a 10 percentage point increase in the prevailing employment rate in the network increases the re-employment probability by 7.5 percentage points. In contrast, there is no evidence of a statistically significant effect on wages.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7392.

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Length: 41 pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7392
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  1. Brown, Meta & Setren, Elizabeth & Topa, Giorgio, 2014. "Do Informal Referrals Lead to Better Matches? Evidence from a Firm's Employee Referral System," IZA Discussion Papers 8175, Institute for the Study of Labor (IZA).
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  16. repec:oup:qjecon:v:94:y:1980:i:4:p:749-75 is not listed on IDEAS
  17. David Card & Laura Giuliano, 2011. "Peer Effects and Multiple Equilibria in the Risky Behavior of Friends," NBER Working Papers 17088, National Bureau of Economic Research, Inc.
  18. Emmanuel Saez & Esther Duflo, 2003. "The role of information and social interactions in retirement plan decisions: Evidence from a randomized experiment," Framed Field Experiments 00141, The Field Experiments Website.
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