Categories:
Economics of Education
I’m looking for research on the extent to which people make useful career connections in school – high school, college, grad school, whatever. My sense is that the economy is so big and diverse that people rarely (a) end up working with their former schoolmates, or (b) get jobs through their teachers or professors, but I’m having trouble finding evidence one way or the other.
If you know of anything I should read, please tell me in the comments.
READER COMMENTS
another bob
Dec 6 2012 at 2:05pm
my first job after college at at a foreign commercial bank in nyc was a direct result of a recommendation from one of my undergraduate professors during my senior year. he recommended me to another of his former students.
Matt
Dec 6 2012 at 2:16pm
Antidotal, but Grad school/Professional school has been a boon for me. I can always find work reaching out to my alumni network. My current job, my boss and 3 co-workers graduated the same program I did. I have hired at least 2 people from my program in the past. However I think this represents a concrete skills thing more than a networking thing. In a world where so much is false on a resume, I know if you graduated the from the X program at Carnegie Mellon, that you can do what I need you to do. I think this is rare and has more to do with professional degrees than degrees in general.
Grad
Dec 6 2012 at 2:42pm
My first job was through the standard in-college recuiting. The offer was cancelled by the medium-sized company, before I could start. Their CEO felt bad about it, and got in touch with one of his old grad school friends, who happened to be the CEO of a startup, who was thinking about hiring. With the pre-screening already done, he called me to interview. Does that count?
I spent several years as an entrepreneur (unfortunately, I did not get rich). My co-founder had originally brought me in as a consultant on another of his businesses, and the conversation sparked the launch of our new venture. We had originally met at grad school.
But, that said, most of my professional leads, including my current job, have come from the people I met in a 5-year window at a major consulting firm. If I were to look for a new job, I would rely mostly on people I’ve met through work. My undergrad network is useless: wrong country. My grad school network is little better: I graduated from one of the big-name technology-focused universities – but I’m a “suit”.
HH
Dec 6 2012 at 2:47pm
I can’t locate it right now, but Alan Krueger did a study measuring outcomes for people who were admitted to the same highly selective colleges, comparing those who went to the Ivies vs not. It turned out to matter more what college you got into than what college you went to, presumably as admission sorts by ability pretty well.
However, an interesting finding of the study was that going to an elite college does matter for students from lower socioeconomic backgrounds. One of the proposed explanations is networking achieved at those places.
I’ll try to locate the study, but I’m sure someone with time and google can get it quickly. [I currently don’t have the former.]
Anthony
Dec 6 2012 at 3:00pm
The Krueger study is “Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables”, but I think Bryan is probably aware of it.
There’s a lot of literature more directly on how people get jobs. You might want to look at “Peer and social networks in job search”, which is a look at Dartmouth students. It’s gotten cited a lot, so looking at who’s cited it could be a good place to start.
Joe
Dec 6 2012 at 3:06pm
Anecdotal, but in the Hedge Fund industry the number of people from Penn, MIT, Sloan, etc. definitely far outweigh the number from other schools.
I did not go to one of these Universities, but I do know that they have an active alumni network and often will hire from that pool.
Daniel Lemire
Dec 6 2012 at 3:10pm
My impression is that it depends on the type of degree. I would expect professional degrees to be far more relevant in this respect (e.g., law degree). If you get a degree in English, then who cares about the social network you established?
HH
Dec 6 2012 at 3:19pm
@ Daniel Lemire,
Could that not also go the other way? Law, engineering, and the like have somewhat measurable inputs and outputs, and the market can sort out valuable contributors fairly quickly. Employers can give you a chance based on semi-objective characteristics. [Anecdotal evidence: I got my legal job with no network to speak of.]
With an English degree, your network is pretty much all you have to convince someone to give you a chance to succeed.
@ Anthony,
Thanks.
Bostonian
Dec 6 2012 at 3:29pm
http://hbr.org/2010/10/the-power-of-alumni-networks/ar/1
The Power of Alumni Networks
by Lauren H. Cohen and Christopher J. Malloy
Information moves the market—that’s understood. But how information moves through the market to eventually affect stock prices is less well understood. After analyzing more than 15 years’ worth of investment data, we’ve found one way that information gets around and improves investing performance: through alumni networks.
We examined a vast data set of trading decisions of mutual fund portfolio managers from 1990 to 2006. We compared the performance of managers’ investments in “connected firms”—that is, companies where at least one senior official had gone to the same college as the investor—with performance investing in “nonconnected” firms—where no college ties existed between the senior ranks and the investor.
Our results reveal a strong pattern, in both stock holdings and returns: U.S. mutual fund portfolio managers placed larger concentrated bets on companies to which they were connected through an education network. And the fund managers performed significantly better on those connected positions than they did on nonconnected ones, to the tune of 7.8% a year.
Mike
Dec 6 2012 at 4:26pm
I know of someone who got his MBA because his employer wanted him to meet others and develop connections. It was not thought that he would gain much from the education, since he had already gone to an elite business school for his BA.
Lemmy Caution
Dec 6 2012 at 4:33pm
“Alan Krueger did a study measuring outcomes for people who were admitted to the same highly selective colleges, comparing those who went to the Ivies vs not. It turned out to matter more what college you got into than what college you went to, presumably as admission sorts by ability pretty well. ”
The results of the study are different from what was reported in the press. You make more money if you go to a school that is more selective:
http://calnewport.com/blog/2008/08/15/does-where-you-go-to-school-matter-and-why-reporters-get-this-wrong/
http://www.overcomingbias.com/2009/03/college-prestige-matters.html
AMW
Dec 6 2012 at 5:22pm
All three of my jobs since college resulted in large part from connections with classmates and professors.
Foobarista
Dec 6 2012 at 5:55pm
Yet more anecdotes: for all its “meritocratic” reputation, nearly all early jobs in tech startups go to people who know the founders. Later on, companies have “recruit your friends and old work chums” strategies such as referral bonuses, etc.
Given the high expense of identifying and filtering good “cold” hires, this makes rational sense, as well as the general theory that good people know each other and will hire each other.
Also, given the relative youth of many SV founders, this means you end up with a whole lot of Stanford and Berkeley kids who recruit from the alumni pool after hiring their friends or good people they’ve worked with in the past.
The much-ballyhooed “kids skipping college to do startups” is still not big enough to be numerically significant in my observation.
BZ
Dec 6 2012 at 6:17pm
The university I went to had a program to help connect graduates with employers. Dr. Caplan might start contacting universities to get information on those programs.
So, my first job out of college came about because of
1. a job fair put together by the university and
2. because a former student friend talked me into joining his particular company.
Jodi Beggs
Dec 6 2012 at 6:45pm
Hi Bryan,
One of my classmates in grad school wrote her dissertation on almost exactly this topic- the title is “Linking Career Paths, Firm Organization, and Industry Structure in Legal Services,” and she looked at school ties and social networks among lawyers to understand the importance of these factors in hiring and promotion. I’m not entirely sure how you would go about finding this (her name is Rachel Parkin and she was a Ph.D. student in Business Economics at Harvard Business School), but I would be happy to put you in touch with her to get a copy if you want. You can email me at jodi at alum dot mit dot edu.
Mark V Anderson
Dec 6 2012 at 7:36pm
I think the whole networking thing is way over-rated. It’s been highly promoted by those who love to network and those who get paid to do so. One always hears these statistics about the number of job openings that aren’t ever advertised, but I’ve never once seen a citation for it, so I suspect it is an urban myth. Every company I’ve ever worked for puts out an ad (or goes to a recruiter) when they want new people, and that’s how they find people. In many cases jobs may go to employees already in the company without ads, and that may be where came some of this idea of no advertisements. But networking outside the company does no good in that case.
It is true that I’ve worked for medium sized and large companies, and the situation may well be different for small firms, as someone suggested about start-ups. Bryan, I think it is very important to stratify by size and maybe type of firm any evidence you come up with, because I think it will be wildly variable.
Of course I am biased in the opposite direction, because I absolutely suck at networking. I’ve never even received an interview based on networking, and I think I’ve had a couple hundred professional interviews in my life.
Justin
Dec 6 2012 at 9:34pm
Another anecdote, but I’m graduating this semester and had a letter of recommendation from a professor who had a prominent position with my soon-to-be employer.
IVV
Dec 7 2012 at 8:49am
Also anecdotally:
NONE of my jobs have arisen from my education network. Perhaps I’m just a poor networker, but I have never received a referral to a job from someone else–but I have always been able to find work based on my skill set, experience, and solicited recommendations.
Professors have not helped in finding employment (other than they did provide recommendations when I started out, when employers called them). Classmates have also offered recommendations, and have given me great help in developing my resume, but once again, no job leads. Ever.
Taylor
Dec 7 2012 at 10:52am
Another anecdote, my investments professor, who is a PM at a large instiutional money mgmt shop, hired me as an intern and kept me on full time when I graduated.
Tom West
Dec 7 2012 at 4:14pm
Jobs:
(1) Hired by professor
(2) Suggested to employer by university friend
(3) Suggested to employer by previous employer
(4) Suggested to employer by previous employer
(5) Suggested to employer by previous employer
(6) Suggested to employer by previous employer
The last 4 were generally 1-3 year contracts. It worries me that I’ve never found a job cold (i.e. that wasn’t either a personal connection or my previous employer saying “you’ve got to hire this guy”) since eventually my string of (so far excellent) jobs might run out.
IVV
Dec 7 2012 at 5:18pm
I’m detecting a theme here, though:
If your job is in the financial services industries, or a tech startup, your job probably came to you through personal/education connections. If, on the other hand, you work in established nonfinancial companies, you had no “in” from friends.
Does this sound about right?
Scott Gustafson
Dec 7 2012 at 6:02pm
My first job came about because of my graduate adviser knowing the hiring manager’s VP. They had also hired others from the school and program.
The school also has excellent ties to various parts of the industry. Whenever the national organizations of professionals meet, there is an alumni lunch for graduates.
I suspect that this works better for smaller more close knit industries.
stephen w. stanton
Dec 9 2012 at 10:04pm
I was referred to my first post-college job by a high school friend. It was a “Big 5” accounting firm.
9 years later, I was later referred to an international bank by an MBA classmate.
Both jobs were big steps up in my career progression.
Peel Street
Dec 10 2012 at 2:24am
I work for a smallish family-run financial firm where a significant portion of the employees are either relatives of the chairman, or had a school connection with a relative. ALL the interns are kids of the clients (institutional investors).
Sounds like a formula for disaster but it is a profit-making firm that has grown sales in past few years despite obvious tough conditions for financial sector
Mike
Dec 21 2012 at 4:43pm
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