Social Networks and the School-to-Work Transition

Social Networks and the School-to-Work Transition

This paper studies the importance of market work during high school for graduates’ school-to-work transition and career. Relying on Swedish linked employer-employee data, I show that such work provides students with an important job-search channel that some graduates are deprived of due to establishment closures that occur just prior to graduation and labor market entry. I identify the effects of the closures by comparing classmates from the same vocational tracks and find immediate and sizable negative effects on employment and earnings after graduation. The effects persist for up to 10 years, but are not permanent. Graduates who lose a connection in an industry that is relevant to their specialization in vocational school adjust by finding employment in less-relevant industries.

Essay II (with Lena Hensvik and Oskar Nordström Skans): Using Swedish economy-wide data spanning across two deep recessions, we examine how the role of social contacts in matching labor market entrants to employing firms changes with labor market conditions. We measure social contacts acquired during paid work while in high-school and rely on interacted class-plant fixed-effects models to isolate the effects of interest. One third of post-graduation matches are formed at establishments where youths worked during their studies. Furthermore, graduates are much more likely to match with sites to which coworkers from these jobs have relocated. These patterns are strikingly counter-cyclical, suggesting that social contacts are crucial determinants of matching patterns in bad times.

Essay III: I provide empirical evidence on whether a longer education can causally reduce the reliance on social contacts in the transition from school-to-work as suggested by previous theoretical work. Relying on matched employer-employee data, I exploit a Swedish trial that generated exogenous variation in the length of vocational upper secondary education and analyze how this affected the use of parental job-search contacts. I find a negative and non-trivial impact on the probability of working at the same establishment as a parent during the early career, which is entirely driven by students with high-educated parents. For the group where the use of parental ties is most prevalent, students with low-educated parents, the reliance on parents appears resilient to policy-induced changes in the length of education.