Coworkers, Networks, and Job Search Outcomes

Social networks are an important channel of information transmission in the labor market. In this paper investigate how displaced workers searching for new jobs benefit from information provided by their former coworkers. In line with the theoretical and empirical literature we find that the employment status networks members matters for the job finding rate. We further analyze the mechanisms through which employed contacts affect job search outcomes and find that (i) the types of firms at which the contacts work are important and (ii) contacts with similar characteristics as the displaced worker lead to better outcomes. Our findings strongly indicate that job referrals from network members are the main mechanism by which social contacts influence job search outcomes.