Coworkers, Networks, and Job-Search Outcomes among Displaced Workers

This article examines the mechanisms by which social networks affect the labor market outcomes of displaced workers. The authors draw on administrative records for the universe of private-sector employment in Austria to identify work-related networks among former coworkers. They analyze the importance of social networks for both job seekers and hiring firms. For job seekers, results indicate that having a high share of former coworkers who are currently employed in expanding firms improves job-finding success. For firms seeking to hire new employees, the authors find that a firm is twice as likely to hire a displaced worker with a former-coworker link to one of their current employees than to hire a worker displaced from the same closing firm but without a link. These results suggest that information about job opportunities and demand-side conditions is transmitted in work-related networks between workers and firms.