Social Networks and the Dynamics of Labor Market Outcomes: Evidence from Refugees

This paper examines the dynamic implications of social networks for the labor market outcomes of political refugees resettled in the U.S. Using a theoretical model of job information transmission within social networks, the paper shows that the relationship between the size of a social network, the vintage of network members and labor market outcomes is non-monotonic. To test this prediction, I use an empirical strategy which exploits the fact that resettlement agencies distribute refugees across cities, precluding individuals from sorting into locations. The results indicate that an increase in the number of social network members resettled in the same year or one year prior leads to a deterioration of labor market outcomes, while a greater number of long-tenured network members improves the probability of employment and raises the hourly wage for newly arrived refugees.