Social Networks and Labor Market Inequality between Ethnicities and Races

Tinbergen Institute Discussion Paper No. 12-120/II

40 Pages Posted: 14 Nov 2012

See all articles by Ott Toomet

Ott Toomet

University of Aarhus; Tartu University

Marco van der Leij

CeNDEF, University of Amsterdam; Tinbergen Institute; De Nederlandsche Bank - Research Department

Meredith Rolfe

University of Massachusetts Amherst; London School of Economics & Political Science (LSE)

Date Written: November 12, 2012

Abstract

This paper analyzes the relationship between unexplained racial/ethnic wage differentials on the one hand and social network segregation, as measured by inbreeding homophily, on the other hand. Our analysis is based on both U.S. and Estonian surveys, supplemented with Estonian telephone communication data. In case of Estonia we consider the regional variation in economic performance of the Russian minority, and in the U.S. case we consider the regional variation in black-white differentials. Our analysis finds a strong relationship between the size of the differential and network segregation: regions with more segregated social networks exhibit larger unexplained wage gaps.

Keywords: social networks, wage differential, homophily, segregation, race, minorities

JEL Classification: J71, J31, Z13

Suggested Citation

Toomet, Ott and van der Leij, Marco Juri and Rolfe, Meredith, Social Networks and Labor Market Inequality between Ethnicities and Races (November 12, 2012). Tinbergen Institute Discussion Paper No. 12-120/II. Available at SSRN: https://ssrn.com/abstract=2174897 or http://dx.doi.org/10.2139/ssrn.2174897

Ott Toomet (Contact Author)

University of Aarhus ( email )

Nordre Ringgade 1
DK-8000 Aarhus C, 8000
Denmark

Tartu University ( email )

Narva 4-A123
Tartu, 51009
Estonia
+372 737 6374 (Phone)
+372 737 6312 (Fax)

HOME PAGE: http://www.obs.ee/~siim

Marco Juri van der Leij

CeNDEF, University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, NL-1018WB
Netherlands
+31 20 525 7356 (Phone)

HOME PAGE: http://home.staff.uva.nl/m.j.vanderleij

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

De Nederlandsche Bank - Research Department ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands

Meredith Rolfe

University of Massachusetts Amherst ( email )

Department of Operations and Information Managemen
Amherst, MA 01003
United States

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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