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Social networks and labor market inequality between ethnicities and races

Published online by Cambridge University Press:  03 January 2014

OTT TOOMET ,
MARCO VAN DER LEIJ  and
MEREDITH ROLFE
OTT TOOMET
Affiliation:
Department of Economics, Tartu University, Tartu, Estonia (e-mail: otoomet@ut.ee)
MARCO VAN DER LEIJ
Affiliation:
CeNDEF, University of Amsterdam; Research Division, De Nederlandsche Bank; Tinbergen Institute, Amsterdam, The Netherlands (e-mail: m.j.vanderleij@uva.nl)
MEREDITH ROLFE
Affiliation:
Department of Management, London School of Economics, London, UK (e-mail: m.r.rolfe@lse.ac.uk)
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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. Our analysis is based on both the US and Estonian surveys, supplemented with the Estonian telephone communication data. In the case of Estonia we consider the regional variation in economic performance of the Russian minority, and in the US case we consider the regional variation in black--white differentials. Our analysis finds a strong relationship between the size of the wage differential and network segregation: Regions with more segregated social networks exhibit larger unexplained wage gaps.

Keywords

social networkswage differentialhomophilysegregationraceminorities
Type
Research Article
Information
Network Science , Volume 1 , Issue 3 , December 2013 , pp. 321 - 352
Copyright
Copyright © Cambridge University Press 2014 

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