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Social resource theory has been challenged, as the effects of contact resources on job outcomes may be spurious given the presence of homophily. We review the Mouw–Lin debate and propose that occupational homophily moderates the role of contact resources in the labor market and that effects of resources depend on labor market institutions. We analyze data from the US, East Germany before 1989, and post-reform China, combining the first-difference method and Heckman selection procedure to deal with endogeneity. Empirical findings from different labor market contexts demonstrate that: (1) contact resources have a causal and positive role in job outcomes; (2) in a market economy, the role of resources is more salient if they provide within-occupation job-leads; (3) under state job-assignment systems occupational homophily does not pay off; and (4) job-search ties can take the form of heterophilous selection.
6. Conclusion and discussion
While it is theoretically intriguing that contacts matter for individual outcomes, most previous studies that provided support for social resource theory (Marsden and Hurlbert, 1988; Volker and Flap, 1999; see Lin, 2001 for a review) have not adequately addressed the endogeneity problem. This is especially problematic in research on the effects of social capital. Mouw (2003) replicated Marsden and Hurlbert’s (1988) 1970 Detroit Area Study and found that social homophily accounts for the association between contact resources and job outcomes. This finding profoundly challenges the social resource theory advanced by Lin (1999). However, in recent studies, Lin and his colleagues defended the theory by taking into account the “correctly” defined occupational similarity (SO2). In the present paper, we have reviewed both sides of the Mouw–Lin debate, and we extended the discussion. On the one hand, we noticed that Mouw’s (2003) replication amounts to fitting models merely on sub-samples among those who used lowefficiency social resources to find jobs in the US. Consequently, the findings in Mouw (2003) in general do not undermine social resource theory. On the other hand, we argued that Mouw’s (2003) concern about same-occupation (SO1) points to the possibility that the effects of social capital are conditioned by similarity. We extended the 1970 DAS by including SO1 and its interaction term with contact resource, and thereby found that SO1 actually strengthened the role of contact resources. We suspected that same-occupation contacts affect job attainment in a modern labor market, but that this is not necessarily the case in a different institutional context, such as a state job-assignment system – where job information does not matter. Based onfindings from the DAS replication, we then moved on to analyze data fromother institutional contexts,i.e.fromthe GDRand post-reform China, to explore the role of contact resources for job outcomes, and how that role is affected by same-occupation contacts. In general, we tested our arguments by comparing findings from three countries with quite different labor market institutions: a free market economy in the US, a command economy in the GDR, and a transitional economy in China. Regarding the methodological issues, we followed Mouw’s (2006) call for appropriate advanced models and rich data to be used when conducting causal analyses. Paying close attention to the omitted variable and sample selection problem in the GDR and China analyses, we compared the estimates from the standard OLS model, the Heckit model and the HeckitFD models. Although our DAS replication is cross-sectional, due to data limitations, conclusive evidence from the GDR and China study were both obtained under the counterfactual framework.