Coworker networks and the labor market outcomes of displaced workers: Evidence from Portugal

Abstract

AbstractThe use of social contacts in the labor market is widespread. This paper investigates the association between personal connections and hiring probabilities as well as re‐employment outcomes of displaced workers in Portugal. 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. Moreover, we show that successful displaced workers with a connection in the hiring firm have higher entry‐level wages and enjoy greater job security.