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Coworkers, Networks, and Job Search Outcomes

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  • Perihan Ozge Saygin
  • Andrea Weber
  • Michèle A. Weynandt

Abstract

Social networks are an important channel of information transmission in the labor market. This paper studies the mechanisms by which social networks have an impact on labor market outcomes of displaced workers. We base our analysis on administrative records for the universe of private sector employment in Austria where we define work-related networks formed by past coworkers. To distinguish between mechanisms of information transmission, we adopt two different network perspectives. From the job-seeker's perspective we analyze how network characteristics affect job finding rates and wages in the new jobs. Then we switch to the perspective of the hiring firm and analyze which types of displaced workers get hired by firms that are connected to a closing firm via past coworker links. Our results indicate that employment status and the firm types of former coworkers are crucial for the job finding success of their displaced contacts. Moreover, 21% of displaced workers find a new job in a firm that is connected to their former workplace. Among all workers that were displaced from the same closing firm those with a direct link to a former coworker are twice as likely to be hired by the connected firm than workers without a link. These results highlight the role of work related networks in the transmission of job information and strongly suggest that job referrals are an important mechanism.

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  • Perihan Ozge Saygin & Andrea Weber & Michèle A. Weynandt, 2014. "Coworkers, Networks, and Job Search Outcomes," NRN working papers 2014-06, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:nrnwps:2014_06
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    Cited by:

    1. Deepti Goel & Kevin Lang, 2019. "Social Ties and the Job Search of Recent Immigrants," ILR Review, Cornell University, ILR School, vol. 72(2), pages 355-381, March.
    2. Chen-Zion, Ayal & Rauch, James E., 2020. "History dependence, cohort attachment, and job referrals in networks of close relationships," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 75-95.
    3. Panle Jia Barwick & Yanyan Liu & Eleonora Patacchini & Qi Wu, 2019. "Information, Mobile Communication, and Referral Effects," NBER Working Papers 25873, National Bureau of Economic Research, Inc.
    4. Albrecht Glitz & Rune Vejlin, 2021. "Learning through Coworker Referrals," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 42, pages 37-71, October.
    5. Allouch, Nizar, 2017. "The cost of segregation in (social) networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 329-342.
    6. Schank, Thorsten & Bossler, Mario & Mosthaf, Alexander, 2016. "More female manager hires through more female managers? Evidence from Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145733, Verein für Socialpolitik / German Economic Association.
    7. Bryan S. Graham, 2019. "Network Data," NBER Working Papers 26577, National Bureau of Economic Research, Inc.
    8. Balázs Lengyel & Rikard H. Eriksson, 2015. "Co-worker networks and productivity growth in regions," Papers in Evolutionary Economic Geography (PEEG) 1513, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised May 2015.
    9. Müller, Dagmar, 2020. "Lost opportunities: Market work during high school, establishment closures and the impact on career prospects," Working Paper Series 2020:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    10. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    11. Balázs Lengyel & Rikard H. Eriksson, 2017. "Co-worker networks, labour mobility and productivity growth in regions," Journal of Economic Geography, Oxford University Press, vol. 17(3), pages 635-660.
    12. Hawranek, Franziska & Schanne, Norbert, 2014. "Your very private job agency : job referrals based on residential location networks," IAB-Discussion Paper 201401, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Levati, Lorenzo Maria & Lalanne, Marie, 2020. "The impact of job referrals on employment outcomes in top corporate positions," SAFE Working Paper Series 268, Leibniz Institute for Financial Research SAFE.
    14. Eliason, Marcus & Hensvik, Lena & Kramarz, Francis & Nordstrom Skans, Oskar, 2019. "Social Connections and the Sorting of Workers to Firms," CEPR Discussion Papers 13672, C.E.P.R. Discussion Papers.
    15. Boza, István & Ilyés, Virág, 2018. "A korábbi munkatársak bérekre gyakorolt hatása [The influence of previous employment on wages]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 726-767.
    16. Ilyés, Virág & Sebők, Anna, 2020. "Egyetemről a munkaerőpiacra. Felsőoktatási ismeretségek hatása a munkaerőpiaci kilátásokra [From university to working life - the effect peers in higher education have on labour-market outcomes]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 993-1028.
    17. Müller, Dagmar, 2021. "Lost Opportunities: Work during High School, Establishment Closures and the Impact on Career Prospects," Working Paper Series 1381, Research Institute of Industrial Economics.
    18. Clara Welteke, 2015. "Peers at Work - a Brief Overview of the Literature on Peer Effects at the Workplace and the Policy Implications," DIW Roundup: Politik im Fokus 68, DIW Berlin, German Institute for Economic Research.
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    20. Focacci, Chiara Natalie & Santarelli, Enrico, 2021. "Job Training, Remote Working, and Self-Employment: Displaced Workers Beyond Employment Hysteresis," GLO Discussion Paper Series 780, Global Labor Organization (GLO).
    21. Bryan S. Graham, 2019. "Network Data," CeMMAP working papers CWP71/19, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.

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    More about this item

    Keywords

    Social Networks; Job Displacement; Plant Closure; Referral Hiring;
    All these keywords.

    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
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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