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Abstract
We investigate the role of coworkers in shaping job mobility decisions by altering workers’ perceptions of their outside options. Using novel survey data collected from a representative sample of U.S. wage and salaried workers, we document two distinct channels through which current and former coworkers influence mobility. First, having more current coworkers with prior experience in an industry improves the accuracy of wage beliefs for that industry. Second, having more past coworkers currently employed at a firm raises the perceived probability of receiving a job offer from that firm, as shown in a survey experiment that elicits subjective job-offer probabilities. We incorporate these findings into a job choice model with coworker-based learning and referral effects. Relative to standard models that assume perfect information about wages and job opportunities, our framework demonstrates that coworker networks facilitate reallocation and reduce the welfare losses associated with informational frictions.