Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279191 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10442
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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 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.
Subjects: 
job displacement
coworker networks
re-employment
JEL: 
J23
J63
L14
Document Type: 
Working Paper
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