Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 06-11: A Social Network Analysis of Occupational Segregation

Sebastian Buhai () and Marco van der Leij
Additional contact information
Sebastian Buhai: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Marco van der Leij: Tinbergen Institute and Erasmus University, Postal: Rotterdam

Abstract: We develop a social network model of occupational segregation between different social groups, generated by the existence of positive inbreeding bias among individuals from the same group. If network referrals are important in getting a job, then expected inbreeding bias in the contact network structure induces different career choices for individuals from different social groups. This further translates into stable occupational segregation equilibria in the labour market. We derive the conditions for persistent wage and unemployment inequality in the segregation equilibria. Our framework is proposed as complementary to existing theories used to explain labour market inequalities between groups divided by race, ethnicity or gender

Keywords: Social Networks; Inbreeding Bias; Occupational Segregation; Labour Market Inequality

JEL-codes: A14; J31; Z13

33 pages, November 7, 2006

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