Social capital determinants and labor market networks

We explore the links between determinants of social capital and labor market networks at the neighborhood level. We harness rich data taken from multiple sources, including matched employer–employee data with which we measure the strength of labor market networks, data on neighborhood homogeneity that has previously been tied to social capital, and new data—not previously used in the study of social capital—on the number and location of nonprofit sector establishments at the neighborhood level. We use a machine learning algorithm to identify the potential determinants of social capital that best predict neighborhood‐level variation in labor market networks. We find evidence suggesting that smaller and less centralized schools, and schools with fewer poor students, foster social capital that builds local labor market networks, as does a larger Republican vote share. The presence of establishments in a number of nonprofit‐oriented industries are identified as predictive of strong labor market networks, likely because they either provide public goods or facilitate social contacts. These industries include, for example, churches and other religious institutions, fire and rescue services including volunteer fire departments, country clubs and golf courses, labor unions, chamber music groups, hobby clubs, and schools.