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Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment

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Author Info
Andersson, Fredrik () (U.S. Department of the Treasury)
Burgess, Simon () (University of Bristol)
Lane, Julia () (National Science Foundation)

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Abstract

Substantial immigrant segregation in the United States, combined with the increase in the share of the U.S. foreign-born population, have led to great interest in the causes and consequences of immigrant concentration, including those related to the functioning of labor markets. This paper provides robust evidence that both the size and the quality of an immigrant enclave affects the labor market outcomes of new immigrants. We develop new measures of the quality, or information value, of immigrant networks by exploiting data based on worker earnings records matched to firm and Census information. We demonstrate the importance of immigrant employment links: network members are much more likely than other immigrants to be employed in the same firm as their geographic neighbors. Immigrants living with large numbers of employed neighbors are more likely to have jobs than immigrants in areas with fewer employed neighbors. The effects are quantitatively important and robust under alternative specifications. For example, in a high value network – one with an average employment rate in the 90th percentile – a one standard deviation increase in the log of the number of contacts in the network is associated with almost a 5% increase in the employment rate. Earnings, conditional on employment, increase by about 0.7%.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4423.

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Length: 38 pages
Date of creation: Sep 2009
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Handle: RePEc:iza:izadps:dp4423

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Related research
Keywords: social networks; immigrant enclaves; labor market intermediaries;

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Find related papers by JEL classification:
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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  1. Marianne Bertrand & Erzo F. P. Luttmer & Sendhil Mullainathan, 2000. "Network Effects And Welfare Cultures," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 1019-1055, August. [Downloadable!] (restricted)
    Other versions:
  2. Bauer, Thomas K. & Epstein, Gil S. & Gang, Ira N., 2002. "Enclaves, Language and the Location Choice of Migrants," IZA Discussion Papers 558, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 246-88, April. [Downloadable!] (restricted)
  4. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June. [Downloadable!]
    Other versions:
  5. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S95-S126, December. [Downloadable!] (restricted)
  6. Martin Nordin & Dan-Olof Rooth, 2007. "The Income Gap Between Natives and Second Generation Immigrants in Sweden:Is Skill the Explanation?," CReAM Discussion Paper Series 0706, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London. [Downloadable!]
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  7. Chiswick, Barry R. & Miller, Paul W., 2002. "Do Enclaves Matter in Immigrant Adjustment?," IZA Discussion Papers 449, Institute for the Study of Labor (IZA). [Downloadable!]
  8. John M. Abowd & John C. Haltiwanger & Julia I. Lane, 2004. "Integrated Longitudinal Employee-Employer Data for the United States," Technical Papers 2004-02, Longitudinal Employer-Household Dynamics, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  9. Haltiwanger, John C. & Lane, Julia I. & Spletzer, James R., 2007. "Wages, productivity, and the dynamic interaction of businesses and workers," Labour Economics, Elsevier, vol. 14(3), pages 575-602, June. [Downloadable!] (restricted)
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  10. Cutler, David M & Glaeser, Edward L, 1997. "Are Ghettos Good or Bad?," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 827-72, August.
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  11. Anna Piil Damm, 2006. "Ethnic Enclaves and Immigrant Labour Market Outcomes: Quasi-Experimental Evidence," CReAM Discussion Paper Series 0607, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London. [Downloadable!]
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  12. Cutler, David M. & Glaeser, Edward L. & Vigdor, Jacob L., 2008. "When are ghettos bad? Lessons from immigrant segregation in the United States," Journal of Urban Economics, Elsevier, vol. 63(3), pages 759-774, May. [Downloadable!] (restricted)
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  13. Patrick Bayer & Stephen L. Ross & Giorgio Topa, 2008. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1150-1196, December. [Downloadable!] (restricted)
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  14. 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. [Downloadable!] (restricted)
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  15. George J. Borjas, 2006. "Making it in America: Social Mobility in the Immigrant Population," NBER Working Papers 12088, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. John Abowd & Bryce Stephens & Lars Vilhuber, 2006. "The LEHD Infrastructure Files and the Creation of the Quarterly Workforce Indicators," Technical Papers 2006-01, Longitudinal Employer-Household Dynamics, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
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