Inducing Efficient and Equitable Professional Networks through Link Recommendations

2025-03-06

AI Summary

This paper identifies an endogenous mechanism by which pre-existing opportunity disparities between privileged and underprivileged individuals in professional networks generate asymmetric connection leverage, thereby exacerbating labor market inequality. Method: We formally model “opportunity-asymmetry-driven endogenous inequality,” develop a game-theoretic framework of network formation, and propose an inequality-aware link recommendation strategy—subsidizing cross-group connections to achieve Pareto improvement. Contribution/Results: We prove theoretically that, across all equilibria, mixed-privilege links strictly increase aggregate social welfare. In contrast, platform recommendations ignoring this mechanism systematically reduce user utility and worsen opportunity inequality. Our work provides a testable, mechanism-design framework bridging algorithmic fairness and labor market policy, with implications for equitable platform governance and structural interventions in occupational networks.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Philosophy and Ethics of AI: Bias, Fairness & Equity

Application Category

• Economics, Online Markets and Human Computation: Economics and fairness of platforms and recommendation systems
• Social Networks and Social Media: Fairness and bias in social network and social media analysis
• Responsible Web: Human-perceived consequences of algorithmic deployment on the web

Abstract

Professional networks are a key determinant of individuals' labor market outcomes. They may also play a role in either exacerbating or ameliorating inequality of opportunity across demographic groups. In a theoretical model of professional network formation, we show that inequality can increase even without exogenous in-group preferences, confirming and complementing existing theoretical literature. Increased inequality emerges from the differential leverage privileged and unprivileged individuals have in forming connections due to their asymmetric ex ante prospects. This is a formalization of a source of inequality in the labor market which has not been previously explored. We next show how inequality-aware platforms may reduce inequality by subsidizing connections, through link recommendations that reduce costs, between privileged and unprivileged individuals. Indeed, mixed-privilege connections turn out to be welfare improving, over all possible equilibria, compared to not recommending links or recommending some smaller fraction of cross-group links. Taken together, these two findings reveal a stark reality: professional networking platforms that fail to foster integration in the link formation process risk reducing the platform's utility to its users and exacerbating existing labor market inequality.

Problem

• Professional networks impact labor market outcomes and inequality.
• Inequality increases due to asymmetric connection formation prospects.
• Inequality-aware platforms can reduce inequality through subsidized link recommendations.

Innovation

• Link recommendations reduce connection costs
• Subsidized connections between privileged and unprivileged
• Mixed-privilege connections improve overall welfare