The Use of Social Networks among Hispanic Workers: an Indirect Test of the Effect of Social Capital

Hispanic workers are approximately fifty percent more likely to use contacts with friends or relatives to find work than white or black workers. It is possible that the reliance on co-ethnic job contacts constrains Hispanics' labor market opportunities by increasing employment segregation and lowering wages. Indeed, the use of contacts is correlated with lower wages and job prestige for Hispanic workers. Nonetheless, this paper argues that informal job search is a critical component of the labor market for Hispanic workers—especially for recent immigrants. Using data from the household and employer samples of the Multi-City Study of Social Inequality (MCSUI), this paper finds that Hispanics' increased use of contacts is explained by language proficiency and time in the U.S., and that the use of contacts by Hispanic workers does not lead to employment segregation. Moreover, using data on undocumented Mexican workers from the Mexican Migration Project (MMP), this paper argues that the social capital of migrant workers— as measured by the number of relatives in the U.S. and as expressed through the use of contacts to find work—has a positive effect on wages.