Coworker Networks and the Labor Market Outcomes of Displaced Workers: Evidence from Portugal

Marta Silva and Jose Garcia-Louzao

No 95, Bank of Lithuania Working Paper Series from Bank of Lithuania

Abstract: The use of social contacts in the labor market is widespread. This paper investigates the impact of personal connections on hiring probabilities and re-employment outcomes of displaced workers in Portugal. We rely on rich matched employer-employee data to define personal connections that arise from interactions at the workplace. Our empirical strategy exploits firm closures to select workers who are exogenously forced to search for a new job and leverages variation across displaced workers with direct connections to prospective employers. The hiring analysis indicates that displaced workers with a direct link to a firm through a former coworker are roughly three times more likely to be hired compared to workers displaced from the same closing event who lack such a tie. However, we find that the effect varies according to the type of connection as well as firms’ similarity. Finally, we show that successful displaced workers with a connection in the hiring firm have higher entry-level wages and enjoy greater job security although these advantages disappear over time.

Keywords: Job Displacement; Coworker Networks; Re-Employment (search for similar items in EconPapers)
JEL-codes: J23 J63 L14 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2021-11-23
New Economics Papers: this item is included in nep-lab, nep-net and nep-ure
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Related works:
Journal Article: Coworker networks and the labor market outcomes of displaced workers: Evidence from Portugal (2024)
Working Paper: Coworker Networks and the Labor Market Outcomes of Displaced Workers: Evidence from Portugal (2023)
Working Paper: Coworker Networks and the Labor Market Outcomes of Displaced Workers: Evidence from Portugal (2021)
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