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Neighborhood Quality and Labor Market Outcomes: Evidence from Quasi-Random Neighborhood Assignment of Immigrants

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  • Anna Piil Damm

    ()
    (Department of Economics and Business, Aarhus University, Denmark)

Abstract

Using survey information about characteristics of personal contacts linked with administrative register information on employment status one year later, I show that unemployed survey respondents with many employed acquaintances have a higher job finding rate. Settlement in a socially deprived neighborhood may, therefore, hamper individual labor market outcomes because of lack of employed contacts. I investigate this hypothesis by exploiting a unique natural experiment that occurred between 1986 and 1998 when refugee immigrants to Denmark were assigned to municipalities quasirandomly, which successfully addresses the methodological problem of endogenous neighborhood selection. Taking account of location sorting, living in a socially deprived neighborhood does not affect labor market outcomes of refugee men. Furthermore, their labor market outcomes are not affected by the overall employment rate of men living in the neighborhood, but positively affected by the employment rate of non-Western immigrant men and co-national men living in the neighborhood. This is strong evidence that immigrants find jobs in part through their employed immigrant and co-ethnic contacts in the neighborhood of residence and that a high quality of contacts increases the individual’s employment chances and annual earnings.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2012-18.

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Length: 61
Date of creation: 13 Aug 2012
Date of revision:
Handle: RePEc:aah:aarhec:2012-18

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Web page: http://www.econ.au.dk/afn/

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Keywords: Residential job search networks; referral; contacts; neighborhood quality; labor market outcomes;

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References

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  1. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
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  4. Edin, Per-Anders & Fredriksson, Peter & Åslund, Olof, 2000. "Ethnic enclaves and the economic success of immigrants - evidence from a natural experiment," Working Paper Series 2000:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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  15. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
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Cited by:
  1. Judith K. Hellerstein & Mark J. Kutzbach & David Neumark, 2013. "Do Labor Market Networks Have An Important Spatial Dimension?," NBER Working Papers 18763, National Bureau of Economic Research, Inc.
  2. Albrecht Glitz, 2013. "Coworker networks in the labour market," Economics Working Papers 1400, Department of Economics and Business, Universitat Pompeu Fabra.

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