The Importance of Networks in the Market for University Graduates in Japan: A Longitudinal Analysis of Hiring Patterns

This study examines the extent to which the transition from university education to work is characterized by persistent hiring flows between university faculties and firms, rather than being characterized by an open market process. Using a specially devised metric, I find that more than one-half of all hires may be attributed to persistence in hiring by firms from specific faculties with the remainder due to random hiring. There does not seem to be a major difference in the importance of screening between science and engineering and non-science faculties. In general, the importance of persistence increases as the difference in the quality of the faculty from which existing personnel in firms graduated, and the standard of faculties from which firms are hiring increases. This suggests that persistence exists to aid firms in screening students when they come from relatively low-standard faculties.