Hiring Molecules, Not Atoms: Comobility and Wages

AbstractWhat role do social connections play in the labor market? A vast, influential literature has detailed the ways in which ties facilitate the flow of information about job opportunities to workers as well as endorsements or referrals of workers to firms. We propose that this role is not constrained to an informational one alone. Rather, relationships between workers can enable a collective job-matching process that facilitates the transfer of shared human capital from one organization to another. Yet "comobility" has been studied only occasionally and among elite workers in particular industries. This study delivers both fieldwork as well as large-sample analysis among all nongovernmental workers in Denmark, finding a 5.5% wage premium for those who move jointly instead of independently, both in the full sample as well as when applying strict matching or fixed effects for workers or firms. Co-movers whose skills are related but not identical capture a higher premium, and the wage gains associated with comobility are not limited to highly skilled workers but rather obtain across a wide range of occupations. Robustness tests establish that the wage premium associated with comobility is not driven by efforts to capture "prized" workers, by employee referrals, or by aggressive hiring by firms. This study provides the first quantification of the anticipated value of comobility, suggesting that both workers and firms may want to revisit individualistic assumptions about how labor markets function. More broadly, our findings show that social relationships can transfer not only information but jointly held human capital across organizational boundaries.