MORSe (Management and Organization Research Seminars): "Referral networks and Discrimination?"

Istituto di management e organizzazione

Data d'inizio: 17 Marzo 2011

Data di fine: 18 Marzo 2011

by Karoly Takacs (University of Brescia)

Thursday, March 17th , 12:30pm, room A23

The present study highlights that discrimination can be pervasive on the labor market also in the lack of average quality differences between members of different categories and also if neutral employers have the best intentions and strive for high quality workers on a perfectly competitive market. We demonstrate that discrimination is highest when employers base their decisions simply on their own experience. Hiring via social network contacts, which could either be by employing friends, using worker referrals, or business recommendations lower discrimination rates compared to the market composed of isolated employers. Thus, contrary to the common belief, referral hiring help markets to work more fairly and efficiently. We should not give too much credit, however, to arguments suggesting that the structure of business networks is detrimental for discrimination, as the network topology does not affect discrimination either in the short or in the long run. A much stronger effect is of aspiration levels that increase discrimination rates for a wide range of parameters, thus can explain why we observe stronger discrimination at top level jobs.