Informal Contacts in Hiring: The Economics Job Market

Using a novel data set, we establish a causal relationship between the connectedness of a PhD adviser and the quality of the placement of her student in the academic job market for Economics graduate students. An adviser's connectedness is measured by her Eigenvector centrality rank in the co-author network. We control for time invariant unobserved adviser characteristics with adviser-fixed effects, and we identify the impact of adviser connectedness by using the changes in the centrality of the adviser's co-authors in the year of student placement as an instrument. Additionally, we use the death of faculty members as an exogenous shock to show that the probability of a student being placed at a particular department reduces when the `social distance' between her adviser and that department increases due to the death. Our results contain a more general insight for any labor market with information frictions - even indirect connections can significantly affect job market outcomes.

Available at SSRN