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Labor Market Networks and Recovery from Mass Layoffs Before, During, and After the Great Recession

Author

Listed:
  • Hellerstein, Judith K.

    () (University of Maryland)

  • Kutzbach, Mark J.

    () (U.S. Census Bureau)

  • Neumark, David

    () (University of California, Irvine)

Abstract

We measure the impact of labor market referral networks defined by residential neighborhoods on re-employment following mass layoffs. Because networks can only be effective when hiring is occurring, we focus on a measure of the strength of the labor market network that includes not only the number of employed neighbors of a laid off worker, but also the gross hiring rate at that person's neighbors' workplaces. We provide additional evidence from two alternative measures of network strength that try to disentangle the mechanism by which networks operate – either by conveying information to job seekers about vacancies or conveying information to hiring employers about potential hires. Our evidence indicates that stronger local labor market networks are linked not just to more rapid re-employment following mass layoffs but to re-employment specifically at neighbors' employers. We also find evidence suggesting that this effect is stronger via network connections that convey information to job seekers about vacancies. Finally, we find evidence that the effects of networks for displaced workers declined during the Great Recession relative to prior or subsequent years.

Suggested Citation

  • Hellerstein, Judith K. & Kutzbach, Mark J. & Neumark, David, 2016. "Labor Market Networks and Recovery from Mass Layoffs Before, During, and After the Great Recession," IZA Discussion Papers 9852, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp9852
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    Cited by:

    1. J. Meekes & W.H.J. Hassink, 2016. "The role of the housing market in workers’ resilience to job displacement after firm bankruptcy," Working Papers 16-10, Utrecht School of Economics.
    2. Jahn, Elke J. & Neugart, Michael, 2017. "Do Neighbors Help Finding a Job? Social Networks and Labor Market Outcomes After Plant Closures," IZA Discussion Papers 10480, Institute for the Study of Labor (IZA).
    3. Jahn, Elke Jutta & Neugart, Michael, 2016. "Do neighbors help finding a job? Social networks and labor market," Annual Conference 2016 (Augsburg): Demographic Change 145476, Verein für Socialpolitik / German Economic Association.
    4. Marcelo Arbex & Dennis O'Dea & David Wiczer, 2016. "Network Search: Climbing the Job Ladder Faster," Working Papers 1606, University of Windsor, Department of Economics.
    5. repec:bla:indres:v:56:y:2017:i:4:p:688-722 is not listed on IDEAS
    6. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute for the Study of Labor (IZA).
    7. Hensvik, Lena & Müller, Dagmar & Nordström Skans, Oskar, 2017. "Connecting the Young: high school graduates' matching to first jobs in booms and great recessions," Working Paper Series 2017:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    Keywords

    networks; displacement; re-employment;

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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