People I Know: Job Search and Social Networks

We assess the strength of information spillovers relating unemployment duration of workers displaced by firm closures to their former colleagues’ current employment status. Displaced-specific networks are recovered from a 20-year panel of matched employer-employee data. Spillovers are identified by comparing performances of codisplaced workers. A one-standard-deviation increase in the network employment rate reduces unemployment duration by about 8%; the effect is magnified if contacts recently searched for a job and if their current employer is spatially and technologically closer to the displaced worker; stronger ties and lower competition for information favor reemployment. Several indirect tests exclude other interaction mechanisms.