How much of the racial wage gap is due to differing job recommendations from friends?

This paper estimates the extent to which inequality in jobs found through friends can account for the aggregate wage gap between black workers and others in the US. Data from the NLSY79 are used to estimate a job search model in which individual productivity is distinguished from social capital by comparing the wages and frequency of jobs found directly with those of jobs found through friends. Jobs found through friends tend to pay more, but this premium is lower for black workers; the difference can account for more than a tenth of the racial wage gap.

Here is the paper, by Nicholas Tenev, a job candidate from the University of Wisconsin.


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