Social Networks, Segregation, and Labor Market Inequality

Social networks play an important role in the transmission of job
information. Approximately 50 percent of workers in the United States
learn of their jobs through friends, relatives, and other social contacts
(Granovetter 95). I will discuss the effects of social network structure
on income inequality and workplace segregation. At the individual
level job seekers prefer uniformly random networks that increase the
range of their social network (Calvo-Armengol and Jackson 2004). At
the group level, however, segregated networks with a non-random
structure can outperform uniformly random networks for the purpose of
aquiring job information. This result occurs because of the ability of
a non-random network to contain job information inside a group.