Workplace Connections and Labor Migration

Abstract

We examine the role of former coworkers in shaping geographic mobility following adverse labor market shocks. Leveraging the quasi-random workplace allocation in the former German Democratic Republic and an establishment-closure design, we provide causal evidence that displaced East German workers are more likely to relocate to West Germany if they have former coworkers already employed there. These effects are strongest among coworkers from the same fine-grained occupation and are driven by access to credible job-related information. Our findings highlight how peer networks can reduce mobility frictions and suggest that specific work-location and workplace information may help to increase regional mobility.