Social networks and the dynamics of labor market outcomes

This dissertation examines the dynamic implications of social networks for the labor market, providing theoretical and empirical evidence. Part 1 explores a theoretical model of job information transmission within social networks. It shows that the relationship between the size of a social network, the vintage of network members and labor market outcomes is non-monotonic. A larger network size affects labor market performance in two ways: on the one hand, more network members results in an increase the amount of job information available within the network. This creates a benefit to network members, improving the probability of employment and wages. However, there is also a second effect, working in the opposite direction, as a larger number of network members exacerbates competition within the network for job information. In the context of an overlapping generations model, the net effect of these two mechanisms depends on the length of time network members have been in the market. The main prediction of the model is that an increase in the size of an arriving cohort leads to a dominant competition effect for that cohort; the negative competition effect is mitigated in subsequent periods, eventually giving away to a dominant positive information effect.;This theoretical prediction is tested empirically in part 2 by examining the labor market performance of political refugees resettled in the U.S. between 2001 and 2005. The empirical strategy 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.;Alternative hypotheses, such as labor market competition arising due to increased labor supply in the face of fixed demand; firms learning over time over refugees' unobserved ability; measurement error and out-migration, are addressed in part 3. The dissertation concludes with a brief discussion of the policy implications for refugee resettlement policy.