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

Ian Schmutte

No 536, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: Referral networks affect the efficiency and equity of labor market outcomes, but few studies have been able to identify earnings effects empirically. To make progress, I build a model of on-the-job search in which referral networks channel information about high-paying jobs. I evaluate the model using geographically detailed employer-employee matched data for the U.S. The referral effect is identified by variations in the quality of local referral networks within narrowly defined neighborhoods. I find, consistent with the model, a positive and significant role for local referral networks on the full distribution of earnings outcomes from job search.

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