Social Networks and Labour Market Outcomes: The Non-Monetary Benefits of Social Capital

We contrast Granovetter’s hypothesis (Granovetter, M. (1973). American Journal of Sociology, 78, 1360–1380; Granovetter, M. (1974). Getting a Job: A Study of Contacts and Careers. University of Chicago Press; Granovetter, M. (1995). Getting a Job: A Study of Contacts and Careers. University of Chicago Press) that social networks help individuals to find better-paid jobs with a new model, which predicts that networks are helpful with respect to non-pecuniary job characteristics but not concerning the monetary pay-offs. Following Montgomery (Montgomery, J. D. (1992) American Sociological Review, 57, 586–596), our model is a combination of classical job-search theory and the network hypothesis. First, concerning the monetary consequences, we test our hypotheses empirically by analysing the 2001 International Social Survey Programme on social relations and support systems. We show that using social ties is a common job-search strategy in all countries. However, using social networks does not increase the monetary pay-off. Second, we use a sample of 8,000 Swiss university graduates who recently entered the labour market to show that informal job-search channels are beneficial with respect to important non-monetary job characteristics. Thus, graduates who received their jobs through social contacts tended to get jobs that are linked to their educational degree and offer better career perspectives. Furthermore, using personal networks is related to lower search costs. Therefore, the results suggest overall that networks improve the non-pecuniary characteristics but not the monetary pay-offs.