Relevant ties matter: The Causal Effect of Work Ties on Unemployment Duration

Christian Albrekt Larsen, Jacob Pedersen, Ted Mouw

    Research output: Contribution to conference without publisher/journalPaper without publisher/journalResearchpeer-review

    Abstract

    What is the effect of social networks on labor market outcomes? The tradition following Grannovetter

    claims that social ties have a positive effect on wages, job prestige and job satisfaction. Although a number

    of studies have found positive correlations between friendship characteristics and labour market status, there

    is still disagreement on whether or not the effect is causal. One objection is that the correlations could be

    caused by social homophily--the fact that similar people tend to become friends with each other. This paper

    uses unique labor market data from Denmark to test for the effect of a very specific form of social capital--

    the number of former work colleagues--on respondents' unemployment duration. To address the possible

    role of social homophily and reverse causality, we use an indirect test of causality proposed by Mouw (2003)

    based on the probability of using contacts to find work. Results indicate that the number of industry-specific

    colleagues is both associated higher employment rates with the probability of using contacts to find work.

    We argue that this is consistent with a causal role of social networks in the labor market, as former

    colleagues provide information about job openings.

    Original languageEnglish
    Publication date2008
    Number of pages20
    Publication statusPublished - 2008
    EventAmerican Sociological Association's 103rd Annual Meeting, Worlds of Work - Boston, United States
    Duration: 1 Aug 20084 Sept 2008

    Conference

    ConferenceAmerican Sociological Association's 103rd Annual Meeting, Worlds of Work
    Country/TerritoryUnited States
    CityBoston
    Period01/08/200804/09/2008

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