Dangerous Liaisons: A Social Network Model for the Gender Wage Gap

27 Pages Posted: 17 Oct 2007

See all articles by Maarten Goos

Maarten Goos

KU Leuven - Faculty of Business and Economics (FEB)

Anna Salomons

Utrecht University - School of Economics; KU Leuven - Center for Economic Studies

Date Written: August 2007

Abstract

We combine stylized facts from social network literature with findings from the literature on the gender wage gap in a formal model. This model is based on employers' use of social networks in the hiring process in order to assess employee productivity. As a result, there is a persistent gender wage gap, with women being underpaid relative to men after controlling for productivity characteristics. Networks exhibit inbreeding biases by productivity and by gender, which in combination with women's lower network density cause women to be hired less often through referral, as well as receive a lower average referral wage premium. Finally, we use 2001-2006 UK Labour Force Survey data to test the hypotheses implied by our model. We find that networks do indeed account for a significant part of the gender wage gap for newly hired workers.

Keywords: social networks, gender wage gap, imperfect information

JEL Classification: J16, J31

Suggested Citation

Goos, Maarten and Salomons, Anna, Dangerous Liaisons: A Social Network Model for the Gender Wage Gap (August 2007). Available at SSRN: https://ssrn.com/abstract=1021699 or http://dx.doi.org/10.2139/ssrn.1021699

Maarten Goos (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

HOME PAGE: http://www.econ.kuleuven.be/maarten.goos

Anna Salomons

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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