Social Networks and the Dynamics of Labor Market Outcomes: Evidence from Refugees Resettled in the U.S. ∗ Lori A. Beaman † Abstract This paper examines the dynamic implications of social networks for the labor market out- comes of refugees resettled in the U.S. A theoretical model of job information transmission shows that the relationship between social network size and labor market outcomes is heterogeneous and depends on the vintage of network members: an increase in network size can negatively impact some cohorts in a network while benefiting others. To test this prediction, I use new data on political refugees resettled in the U.S. and exploit the fact that these refugees are distributed across cities by a resettlement agency, precluding individuals from sorting. The results indicate that an increase in the number of social network members resettled in the same year or one year prior to a new arrival leads to a deterioration of outcomes, while a greater number of tenured network members improves the probability of employment and raises the hourly wage. 1 Introduction Whether refugee or resident, social networks play an important role in the U.S. labor market. Studies from the 1930s onward report that between 30 and 60% of jobs are found through informal social network contacts (Bewley, 1999; Ioannides and Loury, 2004). A number of studies provide empirical evidence of network-based job referrals and informational spill-overs in the U.S. labor market (Bayer, Ross, and Topa, 2008; Munshi, 2003; Topa, 2001; Laschever, 2009). Economists have argued that networks are important in the labor market because of market imperfections, such as ∗ I am indebted to the resettlement group of the International Rescue Committee for providing access to the data for this paper and for teaching me about the resettlement process. I appreciate the valuable and significant input that many people have given me on this paper over the years, and I wish to thank in particular Imran Rasul, two anonymous referees, Chris Udry, Mark Rosenzweig, Rohini Pande, Frank Limbrock, and Jeremy Magruder. All errors are my own. † Department of Economics, Northwestern University. Email: [email protected]. 1
Social Networks and the Dynamics of Labor Market Outcomes: Evidence from Refugees Resettled in the U.S
Jul 11, 2023
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