Hearing About A Job: Employer Preferences, Networks and Labor Market Segregation

We present a framework for simulating labor market matching processes in order to study mechanisms that generate segregation. Empirical evidence reveals that labor markets are often highly segregated with respect to the ascribed attributes of workers. Many occupations are sex-typed, while in heterogeneous societies certain fields are often dominated by specific ethnic groups. Various explanations have been proposed to account for segregation in labor markets. On balance, most of these explanations can be classified as essentially “supply-side” arguments, emphasizing differences in human capital distributions between groups, or “demand-side” accounts, based on employer preferences (either in-group or out-group biases). Yet the process of labor market stratification is not merely a matter of the human capital characteristics of workers or the preferences of employers; it also a function of the complex process by which persons are matched with one another, including the way that agents in the market find and evaluate information. In our research we address these oft-overlooked issues by considering two networkrelated aspects of the matching process explicitly: who knows about jobs, and how network structure relates to attributes. Using an agent-based simulation model, we show how network homophily can result in acute segregation by ascribed attribute, even in the absence of discriminatory preferences on the part of employers or supply-side human capital differences. Further, we consider how network dynamics, combined with workplace practices, can amplify or mitigate these effects. Implications for social policy are discussed.