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

  • Andersson, Fredrik

    ()

    (Lund University)

  • Burgess, Simon

    ()

    (University of Bristol)

  • Lane, Julia

    ()

    (New York University)

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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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
Date of revision:
Handle: RePEc:iza:izadps:dp4423
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  4. Anna Piil Damm, 2009. "Ethnic Enclaves and Immigrant Labor Market Outcomes: Quasi-Experimental Evidence," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 281-314, 04.
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  10. Nordin, Martin & Rooth, Dan-Olof, 2007. "The Income Gap Between Natives and Second Generation Immigrants in Sweden: Is Skill the Explanation?," IZA Discussion Papers 2759, Institute for the Study of Labor (IZA).
  11. Åslund, Olof & Edin, Per-Anders & Fredriksson, Peter, 2001. "Ethnic Enclaves and the Economic Success of Immigrants - Evidence from a Natural Experiment," CEPR Discussion Papers 2729, C.E.P.R. Discussion Papers.
  12. Edward P. Lazear, 1995. "Culture and Language," NBER Working Papers 5249, National Bureau of Economic Research, Inc.
  13. George J. Borjas, 2006. "Making it in America: Social Mobility in the Immigrant Population," NBER Working Papers 12088, National Bureau of Economic Research, Inc.
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  15. 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.
  16. B.R. Chiswick & P.W. Miller, 2000. "Do Enclaves Matter in Immigrant Adjustment?," Economics Discussion / Working Papers 00-19, The University of Western Australia, Department of Economics.
  17. Giorgio Topa & Stephen Ross & Patrick Bayer, 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Working Papers 05-23, Center for Economic Studies, U.S. Census Bureau.
  18. Krishna Patel & Francis Vella, 2013. "Immigrant Networks and Their Implications for Occupational Choice and Wages," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1249-1277, October.
  19. 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.
  20. 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.
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