Do Job-Seekers Benefit from Contacts? A Within-Individual Test with Contemporaneous Searches

While it is intuitively plausible that using contacts in a job search benefits a job-seeker, studies of job-seekers are plagued by theoretical disagreement and inconclusive empirical evidence. In particular, the evidence from between-individual studies — studies that compare outcomes for different individuals — suggests that the relationship between a job-seeker’s social capital and her labor-market outcomes might be spurious. In this paper we exploit a strategic research setting, the school-to-work transition of 291 university graduates who engaged in 3,112 contemporaneous job searches, to conduct a within-individual study comparing outcomes of job searches through contacts and through formal methods for the same individual. We find that even while between-individual tests indicate that contacts do not matter, within-individual tests indicate that job-seekers do benefit from using contacts. We conclude by discussing the implications of our findings for the literatures on job search and social networks.