  We propose an equilibrium interaction model of occupational segregation and
labor market inequality between two social groups, generated exclusively
through the documented tendency to refer informal job seekers of identical
"social color". The expected social color homophily in job referrals
strategically induces distinct career choices for individuals from different
social groups, which further translates into stable partial occupational
segregation equilibria with sustained wage and employment inequality -- in line
with observed patterns of racial or gender labor market disparities. Supporting
the qualitative analysis with a calibration and simulation exercise, we
furthermore show that both first and second best utilitarian social optima
entail segregation, any integration policy requiring explicit distributional
concerns. Our framework highlights that the mere social interaction through
homophilous contact networks can be a pivotal channel for the propagation and
persistence of gender and racial labor market gaps, complementary to long
studied mechanisms such as taste or statistical discrimination.
