Decomposition of co-worker wage gains

Boza, István; Ilyés, Virág

doi:10.2478/izajole-2020-0008

Cited by 5 publications

(5 citation statements)

References 35 publications

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“…This model shows that the consequence of having former co-workers at a company is increased starting wages. The existence of such a wage gain has been shown empirically-a fact that has been explained by two rationales: First, that by network information firms can select workers with better unobserved skills, and secondly, that such networks enable workers to choose from higher productivity (and thus higher paying) firms [27,28]. Another consequence is that employers are more likely to hire workers with whom their current workers have connections [29].…”

Section: Introductionmentioning

confidence: 99%

Do Co-Worker Networks Increase or Decrease Productivity Differences?

Lőrincz

2021

Entropy

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Do labor mobility and co-worker networks contribute to convergence or divergence between regions? Based on the previous literature, labor mobility contributes to knowledge transfer between firms. Therefore, mobility may contribute to decreasing productivity differences, while limited mobility sustains higher differences. The effect of co-worker networks, however, can be two-fold in this process; they transmit information about potential jobs, which may enhance the mobility of workers—even between regions—and this enhanced mobility may contribute to levelling of differences. However, if mobility between regions involves movement costs, co-worker networks may concentrate locally—possibly contributing to the persistence of regional differences. In this paper, we build an agent-based model of labor mobility across firms and regions with knowledge spillovers that reflects key empirical observations on labor markets. We analyze the impact of network information provided about potential employers in this model and find that it contributes to increasing inter-regional mobility, and subsequently, to decreasing regional differences. We also find that both the density of coworker networks, as well as their regional concentrations, decrease if network information is available.

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Section: Introductionmentioning

confidence: 99%

Do Co-Worker Networks Increase or Decrease Productivity Differences?

Lőrincz

2021

Entropy

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“…Similar studies, with respect to data and approach, have already demonstrated that workers are more likely to get their new jobs at firms where their acquaintances are employed (Saygin, Weber and Weynandt, 2021), and also that co-workers affect wages to a meaningful extent (Boza and Ilyés, 2020;Glitz and Vejlin, 2021). Some of the results even shed light on gender differences: women benefit less from their former co-workers in terms of wages (Boza and Ilyés, 2020) and they receive a lower amount of work-related information from their employed former co-workers (Saygin, Weber and Weynandt, 2021). However, none of the previous studies focused exclusively on or addressed comprehensively the differences in the measured effects by gender.…”

Section: Introductionmentioning

confidence: 66%

“…Informal ties, through information delivery, referral and signaling, can enhance the individuals' job finding chances (Holzer, 1988;Cingano and Rosolia, 2012;Saygin, Weber and Weynandt, 2021). Moreover, they can contribute to the creation of better employer-employee matches (Dustmann et al, 2016;Boza and Ilyés, 2020) which typically couples with longer tenure, lower turnover and higher wages (Hensvik and Skans, 2016;Glitz and Vejlin, 2021). The benefits acquired through informal search, however, are highly dependent on the characteristics of the individuals and their network quality.…”

Section: Gender Segregation In Labor Market Networkmentioning

confidence: 99%

“…Beside gender, the occupation of contacts might also influence the job seekers chances of hiring. Contacts with a higher position in the occupational ladder may have more knowledge about prospective vacancies and more power to influence hiring decisions and labor market outcomes (Lin, 1999;Boza and Ilyés, 2020). 69 However, according to the literature, the network of women might have lower intensity of such contacts, which could reduce the amount of utilities received from such ties (Moore, 1990;Ibarra, 1993).…”

Section: Role Of the Occupation Of Contacts On Job Findingmentioning

confidence: 99%

“…77 They can, therefore, be good sources of relevant job opportunities and recommendations (Antoninis, 2006). A stream of studies demonstrated that former co-workers could increase jobfinding chances (Granovetter, 2019;Saygin, Weber and Weynandt, 2021) and might contribute to the achievement of a higher level of wages (Hensvik and Skans, 2016;Boza and Ilyés, 2020) and longer tenure (Glitz and Vejlin, 2021). Regarding career entrants, Hensvik and Skans (2014) showed that vocational school graduates are more likely to find their first stable job after graduation at their former internship place or at those companies where their former internship colleagues worked.…”

Section: Social Network and Labor Market Opportunitiesmentioning

confidence: 99%

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Social Networks and Individual Labor Market Outcomes - Evidence from Linked Employer-Employee Panel Data

Ilyés¹

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The dissertation focuses on the impact of social networks on the economic and employment opportunities of individuals. It examines the direct and indirect effects of professional ties on various labor market outcomes, such as job finding probabilities, wages, job stability, and upward mobility. Following recent trends in the measurement of network effects, the empirical work takes a relatively novel approach to quantify the economic benefits of social ties by utilizing a large Hungarian linked administrative employer-employee panel dataset. While the dataset does not contain direct information on social ties, it does have anonymous firm and individual identifiers, which can be used to identify different segments of networks, such as former co-workers and university peers. Building on studies using similar data, elaborating on empirical approaches already used to measure network effects, and incorporating recent developments in panel data methods, the dissertation presents three empirical studies on the role of social ties in the labor market. The first study contributed to the literature of co-workers, employee referral, and wage differences in multiple ways. First, by being the first to document the presence of wage gains commonly attributed to the referral activity of former co-workers through the estimation of a two-way fixed effects wage equation on starting wages. We found a 2.1% premium for men, which originates from the direct (“presence”) effect of referrers and match selection (that is co-workers facilitate the creation of better employer–employee pairings). Second, by jointly assessing those selection channels that may also contribute to the generation of the overall wage gains and by examining their relative importance. We demonstrated that there is an additional 1.7% and 0.9% wage advantage, reflecting individual and firm selection, respectively. The presence of such wage elements implies that former co-workers might help individuals getting into high-wage firms, and they also induce the selection of better individuals to firms. Fourth, by slightly extending upon the decomposition method of Woodcock (2008), and this way, by showing an even more nuanced picture on the actual drivers of given selection channels. We revealed that the individual and firm selection terms are mostly driven by their respective within components. That is, individuals with contacts tend to be hired by companies with superior worker pools compared to other firms that rely solely on formal hiring, and that the unobserved quality of linked workers is usually better than the quality of their new firms’ other hires. Finally, we contribute to the literature by presenting various endeavors to link differences in the estimated wage components to theories in the referral and co-worker literature. The second study investigates the differential effects of former co-workers on job finding probabilities and upward mobility by gender. The results of the hiring analysis showed that (1) men benefit more from the help of former co-workers; (2) gender homophily in network effects is only present due to gendered patterns of labor market segregation; and (3) the hiring benefits of women are mostly driven by the help of contacts higher up in the occupational ladder. By focusing on job entries to new firms, we have also shown that informal contacts can also influence career development through job mobility. However, the benefits are unevenly distributed both across and within genders. The returns to social ties are greater for men, who tend to realize meaningful benefits regardless of their prior job and firm quality. On the contrary, among women, only those with average or worse labor market positions receive such gains. The results reflect a duality in network effects: while social ties enhance the limited opportunities of women in worse positions, they also contribute to preserving existing gender differences at the top segments of the labor market. The final study examines the effect of former university peers on job finding and the quality of the first job. The results suggests that acquaintances from university influence the labor market outcomes of graduates at the start of their careers: they increase the chances of their peers of getting into given firms and contribute to getting more prestigious and better paying jobs. However, the measured benefits are primarily attributable to ties from bachelor’s studies, while the impact of master’s peers is mainly driven by the selection of individuals along existing pathways between university master’s programs and given firms. These findings may suggest that too much similarity in the educational and career paths of former university peers, especially early in their careers, may limit the chances of individuals providing help to each other and may even be accompanied by crowding out effects. Also, that dissimilarity, to a given extent, could be associated with increased information on available jobs and better economic opportunities. The results of the studies, taken together, advance our understanding on the relationship between networks and individual economic opportunities and provide essential insights for the disciplines of sociology, economics, and social policy as well. By facilitating discussion on the dual nature of networks as sources of economic benefits and amplifiers of inequalities, hopefully the thesis will inspire further academic work on the topic.

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University peers and career prospects: The impact of university ties on early labor market outcomes

Ilyés,

Sebők

2023

Economics of Education Review

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Decomposition of co-worker wage gains

Cited by 5 publications

References 35 publications

Do Co-Worker Networks Increase or Decrease Productivity Differences?

Do Co-Worker Networks Increase or Decrease Productivity Differences?

Social Networks and Individual Labor Market Outcomes - Evidence from Linked Employer-Employee Panel Data

University peers and career prospects: The impact of university ties on early labor market outcomes

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