1 THE IMPACT OF ASPIRATIONS AND REFERRAL NETWORKS ON DISCRIMINATION 1 Károly Takács* a , Flaminio Squazzoni b , Giangiacomo Bravo c a Research Center for Educational and Network Studies (RECENS), Institute of Sociology and Social Policy, Corvinus University of Budapest Közraktár u. 4-6., 1093 Budapest, Hungary b Department of Social Sciences, University of Brescia, Via San Faustino 74B, 25122 Brescia, Italy c Department of Social Sciences, University of Torino, and Collegio Carlo Alberto Via Sant’Ottavio 50, 10132 Torino, Italy *To whom correspondence should be addressed. E-mail: karoly.takacs@uni-corvinus.hu Paper to be presented at the Fourth Conference of the European Network of Analytical Sociologists University of Paris IV - Sorbonne 9-10 June 2011 Abstract This study highlights that discrimination can be pervasive on the labor market also in the lack of quality differences between different categories and if employers with unbiased intentions strive for high quality workers. We show that aspiration levels play a crucial role in increasing discrimination rates for a wide range of parameters. This might explain why we observe stronger discrimination at top level jobs. Hiring via social networks, which could either mean employing friends, using worker referrals, or business recommendations, lowers discrimination rates compared to a market that is composed of isolated employers. Thus, contrary to the common belief, referral hiring helps fair and efficient functioning of the labor market. 1 We thank Claudio Gandelli, Marco Castellani, Balázs Kovács, Gianluca Carnabuci, Eric Quintaine, participants at the seminars at the University of Brescia and University of Lugano, and anonymous reviewers of the Fourth Conference of the European Network of Analytical Sociologists, Paris 2011 for their comments on an earlier version. The first author gratefully acknowledges support from the Intra-European Fellowship Program of the European Union, GA- 2009-236953.