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I use data on the hiring practices and spatial location of firms in four cities to model the process of interfirm racial segregation. When I control for the spatial location of the firm, the use of employee referrals reduced the probability of hiring a black worker by 75% in firms that are less than 10% black. Among all firms, the results suggest that employee referrals are just as important as the geographic location of the firm in generating employment segregation: both increase the predicted level of interfirm racial segregation among blue-collar workers in the cities studied by about 10%.

Are black workers missing the connection? The effect of spatial distance and employee referrals on interfirm racial segregation