Professionals build networks to enhance their careers,
often with the goal of gaining better access to new job opportunities. These
benefits seem obvious, but economic research can provide deeper insight into how
a job seeker’s network affects the speed and quality of job offers.
In “Network Search: Climbing the Job Ladder Faster,” St. Louis Fed economist David Wiczer and his coauthors Marcelo Arbex and Dennis O’Dea provide new ways to view differences in wages and unemployment duration as they relate to differences in social connections. Read the full-length academic paper here.
After analyzing survey data from the U.S. and Europe, the authors show that networks shorten the time it takes to find a job, which is not much of a surprise; but they also show that jobs found through networks have higher wages and last longer than jobs found through direct contact with a firm. In fact, network job searches are inherently different from direct job searches.
1. Network searches have higher finding rates. A wider and stronger network of connections allows access to more job offers. Having more offers makes it more likely a job match will occur in a shorter amount of time: 1 to 3 months shorter, according to the authors.
2. The job offers are higher in quality. Those who are better connected will rely on their network for their job search. Their network connections are also more likely to be well-connected and well-established themselves. Well-established workers are more likely to provide a job referral that has high wages and is higher on the job ladder—that is, much like their own high-wage, high-position jobs.
3. The jobs are longer in duration. Better offers are more attractive and more likely to entice a worker to retain the job, which extends tenure and minimizes turnover.
A strong network of connections offers key advantages in your job search. And economic research offers key advantages in your understanding of the mechanisms behind employment.