@article {655212,
	title = {Seeing Through Colorblindness: Social Networks as a Mechanism for Discrimination},
	journal = {Journal of Law and Economics},
	year = {Forthcoming},
	abstract = {
	I study labor markets in which firms both (1) hire via referrals and (2) are race-blind or "colorblind." \&nbsp;I develop an employment model showing that{\textemdash}despite initial equality in ability, employment, wages, and network structure{\textemdash}minorities receive disproportionately fewer jobs through referral and lower expected wages, simply because their social group is smaller. \&nbsp;This discriminatory outcome, which I term "social network discrimination," arises from homophily and falls outside the dominant economics discrimination models{\textemdash}taste-based and statistical. \&nbsp;I calibrate the model using a nationally-representative U.S. sample and estimate the lower-bound welfare gap caused by social network discrimination is up to 3.2 percent, disadvantaging black workers. \&nbsp;This paper isolates a potential underlying mechanism for inequality, adding to the understanding of labor market disparities that have been widely studied across the social sciences. \&nbsp;In doing so, the paper disproves the proposition that "colorblind"\&nbsp;policies are inherently merit-promoting, thereby introducing a new rationale for race-conscious policy.

},
	url = {https://arxiv.org/abs/2006.15988},
	author = {Chika O. Okafor}
}
