social capital makes the labor market more fluid

In 2012, Kei Kawashima-Ginsberg, Chaeyoon Lim, and I published research for the National Conference on Citizenship showing a strong link between the civic engagement of cities and states and their economic performance after the great recession of 2007-9. Ours was a correlational study with lots of controls, and that method neither proves causality nor provides explanations for the correlations. We did hypothesize a whole set of explanations for why civic health would be good for economic health, and (specifically) employment.

Yesterday, the New York Times’ Patricia Cohen reported on a new Bookings study by Raven Molloy, Christopher L. Smith, Riccardo Trezzi, and Abigail Wozniak. The authors find that employment fluidity has declined. That would be OK if it meant that people were landing stable jobs that they like, but it appears that instead, many people are stuck in jobs that are not satisfactory yet don’t leave them, in part because opportunities are too scarce. Cohen writes:

One of the more intriguing findings was the role of declining social trust and what is known as social capital — the web of family, friends and professional contacts. For example, the proportion of people who agree with the statement, “Most people can be trusted,” has been shrinking for more than three decades. Researchers found that states with larger declines in social trust also had larger declines in labor market fluidity. The lack of trust may increase the cost of job-hunting and make both employees and employers more risk-averse.

Ms. Wozniak added that the benefits of LinkedIn and Facebook friends may not replace the personal connections that still remain the best way to find a job.

By the way, my Tufts colleague Laura Gee published a piece in The Conversation yesterday in which she noted that more than half of jobs are found through social ties, and that on Facebook, it is mostly people’s stronger and closer connections that land them jobs.

Additional points from the Brookings report itself (pp. 36-8): social capital is related to better economic performance, and the causal arrow seems to point from better social capital to “long-run growth at the country level.” Social capital helps job searches because people find jobs through networks, and networks reduce the cost of filling jobs. Social capital has declined in the US. At the state level, greater declines in social capital are associated–weakly–with declines in job fluidity.

About Peter

Associate Dean for Research and the Lincoln Filene Professor of Citizenship and Public Affairs at Tufts University's Tisch College of Civic Life. Concerned about civic education, civic engagement, and democratic reform in the United States and elsewhere.
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