If you’re unemployed, spend time with your friends who have jobs — you’re more likely to find a job and be offered a better salary than if you hang around with other unemployed people, according to new research being presented this week in Britain at the Royal Economic Society’s 2011 annual conference.
Lorenzo Cappellari of Catholic University of Milan and the Institute for the Study of Labor (IZA) in Bonn and Konstantinos Tatsiramos of IZA and the University of Leicester analyzed data from the British Household Panel Survey between 1992-2005. They found that for an unemployed individual, having one more employed friend:
- Increases the chances of finding a job by as much as 18%.
- Increases the likelihood that the new job is well paid.
- Reduces the chances of falling back into unemployment.
A pair of U.S. researchers found something similar: Social interactions between neighbors are an important source of job referrals, especially if the neighbors are of similar age and education, and have children of the same age. Duke economist Patrick Bayer, Stephen Ross of the University of Connecticut, and Giorgio Topa of the Federal Reserve Bank of New York published their findings in the ‘Journal of Political Economy’ in December 2008.
Examining 1990 Census data, the researchers looked at neighbors in the Boston area and found that residing on the same block (versus on nearby streets) increased the probability of working together by 33 percent. The “referral effect” benefits were greatest for neighbors who were well-matched in terms of education and age: Those men tended to earn 4 to 6 percent more, suggesting that they were finding better positions through their neighbors. There was no salary effect for well-matched women, but they were more likely to be in the workforce.
How important are connections? How did you find your last job? What’s your advice for the unemployed?