Intergroup Socialization in the Labor Market

Abstract

This paper studies the endogenous decisions of individuals in both the majority and the minority group on intergroup socialization in the labor market. Individuals have heterogenous utilities for the jobs associated with distinct group characteristics. They acquire job information either from the labor market or through within- or inter- group socialization. Each individual maximizes her welfare by making decisions on who she socializes with and how much socialization effort she exerts. We find: First, a larger majority group size leads to a higher (lower) proportion of minorities (majorities) to choose intergroup socialization, and minority (majority) individuals who choose intergroup socialization exert more (less) effort; Second, stronger in-group favoritism of majority group leads to a lower proportion of individuals in both groups to choose intergroup socialization, and minority (majority) individuals who intergroup socialization exert less (more) effort; Third, not all the individuals benefit from the intergroup socialization.