About a Job: Networks, Information and Segregation in Labor Markets

In this project we study how matching processes and structural conditions interact to produce various levels of segregation in labor markets. Empirical evidence reveals that labor markets are often highly segregated with respect to the ascribed attributes of workers. Most of the traditional explanations that have been proposed to account for segregation in labor markets can be classified as either 'supply-side' (worker qualifications or preferences) or 'demand side' (job requirements or discrimination by employers) accounts. Neither of these accounts addresses the structure of information that links potential workers and employers, or how these actors evaluate the information they do acquire. However, how potential workers hear about vacant jobs, and how employers view referred employees, are crucial parts of the hiring process, and have implications for the level of segregation in a labor market. Our project has three specific aims: (1) To refine and extend our existing two-sided matching model of a labor market to incorporate key aspects of labor market institutions and the information structures (including networks) that are relevant for recruiting; (2) to calibrate this model with data describing empirical labor markets; (3) to use this model as an experimental framework to generate testable hypotheses about the relative importance of supply-side, demand-side, and matching based mechanisms that can influence the level of segregation in a labor market.