Abstract
We develop a model to study how individuals make optimal intergroup or intragroup socialization decisions to improve job search prospects in an ethnically segregated labor market. Individuals belonging to either a majority or a minority group have heterogeneous match quality with jobs of the two groups. We analyze the effects of group size and distribution of match quality on individuals' socialization strategies. We find that the socialization choices on the extensive margin create a spillover effect on the socialization decisions on the intensive margin through influencing the competition for jobs. As a result, the individuals’ socialization strategies on the extensive and intensive margins may not go in the same direction. From the welfare perspective, we find that only the individuals having a high level of match quality with jobs of the other group can benefit from the possibility of intergroup socialization while others lose. Moreover, social integration does not necessarily improve the welfare of each group.
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