New Berkeley Economics research finds that college alumni networks play a significant role in where people move after losing a job, suggesting social connections can influence relocation decisions as much as economic opportunity.
In his economics dissertation research titled, “College Alumni Networks and Mobility Across Local Labor Markets,” Economics PhD student Richard Jin discovered that job seekers are more likely to move to cities where their alma mater has a larger alumni presence. Those moves also tend to coincide with relocating to places associated with higher earnings potential.
The findings suggest that alumni networks may help guide people toward locations that offer greater economic opportunity, even if the exact cause and effect relationship still requires more research.
“We found that when people moved from cities that had smaller networks from their alma mater to those with larger networks, these moves also coincided with moving from cities that had smaller place effects on earnings to cities with larger place effects,” Jin said. “This finding at least suggests that alumni networks could provide pathways for individuals to find greater economic opportunity via their location choice, but there's definitely room for additional work to more firmly establish a causal link here.”
A common economic theory is that when a worker loses their job, they move to wherever there are opportunities. Jin said his study suggests social networks can play a powerful complementary role.
“Informally, I'd always hear anecdotes about how someone's alumni network helped them get a job, but I also wondered whether these networks could affect other decisions, including where college graduates choose to live,”Jin said.
He added that the rise of professional networking platforms has amplified the role alumni connections play in job searches.
“The large effects highlight an important change in job search behavior and access to information that's been fueled by the rise of platforms like LinkedIn,” Jin said. “Job seekers nowadays are able to learn so much about different jobs in different cities and see how many alumni are at those companies and living in those cities.”
The findings raise an important question for universities, such as UC Berkeley, that heavily invest in their alumni communities, Jin said, including whether those networks should be considered part of regional economic development.
“The universities side is really interesting – while this isn't something we directly quantify, our findings suggest that the inherent value of a school's alumni networks in different cities could be informative for prospective students when deciding where to attend college,” Jin said.
Jin said the findings also pose important considerations for policymakers.
“For local policymakers, I think there are many serious considerations here,” he noted. “Our findings suggest that strong network effects on mobility would draw even more fellow alumni to the local area, amplifying this initial retention.”
He noted that while strong alumni networks can help regions attract talent, they may also intensify competition between cities.
“But there remains a tension between regions here because if one region gets more college graduates flowing there, then other regions are losing those graduates,” Jin said.
For undergraduates preparing to enter the workforce, Jin said alumni networks can be especially valuable when students build meaningful connections early with alumni in their industries.
“Although LinkedIn allows students to connect with such a wide range of alumni across many cohorts and industries, it's the individuals with whom they're most likely to interact during school and the alums who are directly linked to their desired industries that would make the largest impact on their future job and location decisions,” he said.