It's who you used to know: Professional networks, heterogeneity, and inequality
I study the effect of an exogenous reduction in the size of a worker's professional network, due to the unexpected death of a past coworker. Using administrative data from Sweden and a matched event study, I find that unexpectedly losing a connection lowers employment by 0.4 percentage points after two years, with slightly larger effects on earnings. Workers are less likely to work in the deceased connection's past workplace post-treatment and treated unemployed workers, in particular, take longer to find a job. I explore heterogeneity in the empirical value of a connection, using the Generalised Random Forest. Valuable connections were older and higher-earning before their death and had a smaller set of connections competing to receive information from them. Using these estimates to quantify the total value of a worker's network I find that removing networks would increase inequality. Workers at the 25th percentile of earnings become 10 percentage points less likely to be employed after losing their network, while workers at the 75th percentile of earnings are not affected.
|