Neighbors Refer Jobs, Study Says
Analysis shows that neighbors on the same block help each other's careers
Monday, December 15, 2008
The next time you are looking for a job, make sure to talk with your next-door neighbors. That tip comes from a new Duke University study, which found that neighbors on the same block successfully refer jobs to one another.
“Neighbors naturally form social networks, but the question is what is the extent and effect of those relationships,” said Patrick Bayer, the lead author of the study and an economist at Duke. “We found that social interactions among neighbors on a block are an important source of job referrals and that these referrals have measurable economic benefits.”
The study, published in the December 2008 issue of the Journal of Political Economy, is called “Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes.” In addition to Bayer, the paper’s authors are Stephen L. Ross, an associate professor of economics at the University of Connecticut, and Giorgio Topa, an assistant vice president at the Federal Reserve Bank of New York.
For the study, the researchers used 1990 census data for the Boston metropolitan area, which was the most recent data available when the project was begun. They compared the job locations of neighbors on the same block to those on nearby blocks.
“Our results indicate the existence of significant social interactions at the block level; based on our most conservative estimates, residing on the same versus nearby blocks increases the probability of working together by over 33 percent,” they wrote. “As a consequence, individuals are about 6.9 percentage points more likely to work with at least one person from their block of residence than they would in the absence of referrals.”
The researchers also found that referrals were more likely when neighbors have things in common such as the age of their children, their own age and educational level.
“Once we showed that folks who are better matched with their immediate neighbors are more likely to find jobs through referrals, we wanted to study what the ultimate impact of these referrals is on employment and earnings,” Bayer said. “So we compared people within the same neighborhood who wound up being well-matched to the neighbors on their block to those who were not as well-matched.”
The results imply that immediate neighbors matter, but in different ways for men and women, he said.
“Neighborhood referrals seem to help men find better jobs -- the average man who was well-matched with his neighbors earned 4 to 6 percent more than a man who was not well-matched,” Bayer said. “Neighborhood referrals seem to help women find jobs -- the average woman who was well-matched with her neighbors was about 2 percent more likely to be in the workforce than someone not well-matched -- but have little impact on their earnings.”
A key feature of the study is its design, which approximates a randomized, controlled experiment, Bayer said.
“In this study, we compare folks who live on the same block with a control sample –- almost identical in social characteristics -- of those that live in the same neighborhood but on different blocks,” Bayer said. “The randomness comes from the limits of the local real estate market: People are choosing their neighborhood but are usually limited in terms of their choice of which particular block to live on within a neighborhood, and so end up pretty randomly on one block versus a nearby one.
“Because of the design of the study, we can be reasonably certain that the results we find both in terms of neighbors sharing workplaces and the economic benefits of being well-matched with one’s immediate neighbors are being caused by interactions among neighbors and not by other confounding factors that might create spurious correlations in the data,” he said.
“Since we used data from last decade, there remains the question of how new communication tools could change this job referral dynamic among neighbors,” Bayer added. “But my intuition is that the types of interactions neighbors have are fairly constant over time.”
