Coworker Influence on Job Choice: Information, Connection, and Industry Switching

We investigate how coworkers shape job mobility decisions by influencing workers’ perceptions of their outside options. Using novel survey data from a representative sample of U.S. wage and salaried workers, we identify two distinct channels through which current and former coworkers affect mobility. First, having more current coworkers with prior experience in an industry enhances both the accuracy of workers’ wage beliefs and their perceived probability of receiving a job offer from that industry. Second, having more past coworkers currently employed in a sector raises the perceived likelihood of receiving an offer from that sector. At the firm level, personal connections increase the perceived probability of receiving an offer from that specific firm, as shown in a survey experiment eliciting subjective job-offer probabilities. We incorporate these findings into a job choice model featuring coworker-based learning and referral effects. Relative to standard models that assume perfect information about wages and job opportunities, our framework demonstrates that coworker networks facilitate labor reallocation and mitigate the welfare losses associated with information frictions.