Asymmetric Gender Homophily in the Startup Labor Market

Homophily, or the tendency for individuals to be attracted to those who resemble them, is significantly influential in the formation of startup founding and top management teams. But its role in subsequent stages of startup growth remains largely unclear. We consider the impact of homophily on matching of early workers to startups. We propose that, in the case of underrepresented minority groups, the tendency toward homophily plays an important role in this matching process, albeit in an asymmetric way. In particular, homophily exerts a stronger influence on the supply than the demand side: job candidates are more inclined to favor startups with demographically similar founders than startup founders are inclined to favor demographically similar job-seekers. Focusing on an important group of historically disadvantaged workers - women - we examine these arguments using unique data on the online recruiting of high-tech startups concentrated in the Silicon Valley. We find evidence suggesting that female candidates' propensity to apply to a job at a given startup increases with the proportion of female founders. However, startups with a higher proportion of female founders are not more likely than other startups to favor female candidates in personnel selection.