In this project we seek to empirically investigate how social networks operate in the labour market. Survey evidence has long indicated that personal contacts are important for transmitting information on job opportunities or referrals. On this basis, an elaborate theory modelling communication flows and aggregation of information in social networks has been developed. But empirical evidence on the effects and mechanisms by which networks influence labour market outcomes is limited. We propose a novel dynamic measure of network capital that can be constructed in administrative data files, such as Social Security earnings data sets available for Austria and Germany. Based on the measure of network capital, we will investigate the impacts of social networks on labour market transitions, job-finding probabilities of displaced workers, and gender-differences in labour market outcomes.
