Labor Market Peer Firms

Nan Li

WORKFORCE SCIENCE PROJECTWorking PAPER SERIES • NO. 2015-02

2015

I propose a new measure of firms’ economic linkages by analyzing employees’ internet co-search patterns on LinkedIn, a professional networking and corporate recruiting website. Labor market peer firms (LMPs) (1) overlap but differ from standard output-market-based industry groupings, (2) exhibit significant incremental power to explain stock return and earning co-movements, (3) outperform standard industry groupings to explain return comovements when LMPs share more labor market skills with the base firm. My results highlight the potential of using employees’ collective wisdom - extracted from the internet - to measure input market linkages that are not identified by standard industry measures.

Search, Learning, Information and Knowledge, Communication, Belief, Unawareness, Labor Economics: General, Comparative Economic Systems: General

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