Some Job Contacts are More Equal Than Others: Earnings and Job Information Networks

There is considerable disagreement about the effects of informal contacts on earnings. Some researchers report higher earnings for those who found their jobs through such contacts, some report lower earnings, and some report no effects. This paper uses data from the National Longitudinal Survey of Youth to address this issue. When contact effects for young male and female workers were measured in the aggregate, those who found their jobs through informal contacts fared no better than those using formal methods. However, if subgroup contact effects were measured, those who found their jobs through prior-generation male relatives most likely to convey high quality information to employers and workers earned at least 13 percent more than those using formal and other informal methods. This means that job network analyses should not focus exclusively on the use of informal contacts but should distinguish between contacts based on what they can potentially provide for jobseekers.