Before revision:  This further translates into stable  occupational segregation equilibria in the labor market. We derive conditions for wage and unemployment inequality in the segregation equilibria and characterize both the first and the second best social welfare optima . We find that utilitarian socially optimal policies always involve segregation, but that integration policies are justifiable by additional distributional concerns.
After revision:  This further translates into stable 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.