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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.

Suggested Citation

  • Anna Piil Damm, 2012. "Neighborhood Quality and Labor Market Outcomes: Evidence from Quasi-Random Neighborhood Assignment of Immigrants," Economics Working Papers 2012-18, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2012-18
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    Cited by:

    1. Christian Dustman & Kristine Vasiljeva & Anna Piil Damm, 2016. "Refugee Migration and Electoral Outcomes," CReAM Discussion Paper Series 1619, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    2. Hellerstein, Judith K. & Kutzbach, Mark J. & Neumark, David, 2014. "Do labor market networks have an important spatial dimension?," Journal of Urban Economics, Elsevier, vol. 79(C), pages 39-58.
    3. Åslund, Olof & Forslund, Anders & Liljeberg, Linus, 2017. "Labour market entry of non-Labour migrants – Swedish evidence," Working Paper Series 2017:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Bosquet, Clément & Combes, Pierre-Philippe, 2017. "Sorting and agglomeration economies in French economics departments," Journal of Urban Economics, Elsevier, vol. 101(C), pages 27-44.
    5. Galster, George & Santiago, Anna & Stack, Lisa & Cutsinger, Jackie, 2016. "Neighborhood effects on secondary school performance of Latino and African American youth: Evidence from a natural experiment in Denver," Journal of Urban Economics, Elsevier, vol. 93(C), pages 30-48.
    6. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    7. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, Elsevier.
    8. Rosenthal, Stuart S. & Ross, Stephen L., 2015. "Change and Persistence in the Economic Status of Neighborhoods and Cities," Handbook of Regional and Urban Economics, Elsevier.
    9. Bosquet, Clément & Combes, Pierre-Philippe, 2017. "Sorting and agglomeration economies in French economics departments," Journal of Urban Economics, Elsevier, vol. 101(C), pages 27-44.
    10. Del Bello, Carlo L. & Patacchini, Eleonora & Zenou, Yves, 2015. "Neighborhood Effects in Education," IZA Discussion Papers 8956, Institute for the Study of Labor (IZA).
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    13. Mota, Nuno & Patacchini, Eleonora & Rosenthal, Stuart S., 2016. "Neighborhood Effects, Peer Classification, and the Decision of Women to Work," IZA Discussion Papers 9985, Institute for the Study of Labor (IZA).
    14. Tammaru, Tiit & Strömgren, Magnus & van Ham, Maarten & Danzer, Alexander M., 2015. "Gender Differences in the Effect of Residential Segregation on Workplace Segregation among Newly Arrived Immigrants," IZA Discussion Papers 8932, Institute for the Study of Labor (IZA).
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    More about this item

    Keywords

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

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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