Job Referral Networks and the Determination of Earnings in Local Labor Markets

Ian Schmutte

Journal of Labor Economics, 2015, vol. 33, issue 1, 1 - 32

Abstract: Despite their documented importance in the labor market, little is known about how workers use social networks to find jobs and their resulting effect on earnings. I use geographically detailed US employer-employee data to infer the role of social networks in connecting workers to jobs in high-paying firms. To identify social interactions in job search, I exploit variation in social network quality within small neighborhoods. Workers are more likely to change jobs, and more likely to move to a higher-paying firm, when their neighbors are employed in high-paying firms. Furthermore, local referral networks help match high-ability workers to high-paying firms.

Date: 2015
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Related works:
Working Paper: Job Referral Networks and the Determination of Earnings in Local Labor Markets (2011)
Working Paper: Job Referral Networks and the Determination of Earnings in Local Labor Markets (2010)
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