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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)

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 quasi-randomly, 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 Norface Research Programme on Migration, Department of Economics, University College London in its series Norface Discussion Paper Series with number 2012025.

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Date of creation: Aug 2012
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Handle: RePEc:nor:wpaper:2012025

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

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  1. Wahba, Jackline & Zenou, Yves, 2003. "Density, Social Networks and Job Search Methods: Theory and Application to Egypt," CEPR Discussion Papers 3967, C.E.P.R. Discussion Papers.
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Cited by:
  1. Glitz, Albrecht, 2013. "Coworker Networks in the Labour Market," IZA Discussion Papers 7392, Institute for the Study of Labor (IZA).
  2. 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.

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