Social networks and Black–White differentials in public employment agency usage among mature job seekers

We conceptually and empirically analyze how local labor market weakness impacts the usage of public employment agencies (PEAs) between Blacks and Whites in the USA. Employing restricted-use data from the National Longitudinal Survey of Youth, our empirical results indicate that Blacks have higher PEA-usage rates than Whites, likely caused by their higher unemployment rates. However, Whites in regions with relatively weak professional networks tended to tap into PEAs more than otherwise similar Blacks, reducing the Black–White differential in PEA usage. These findings fit with the conceptual prediction that Whites endure a disproportionate negative impact when tighter labor markets (and thus fewer referrals) exist. They also raise the question about whether current anti-labor-market discrimination policies account for potential job-referral differentials between Black and Whites. To the extent that employers favor employee recommendations from members of a particular racial/ethnic group, then perhaps policy targeting discrimination in the workplace should consider how job openings are initially advertised and subsequently filled.