IDEAS home Printed from
   My bibliography  Save this paper

Social Capital and Immigrants' Labour Market Performance


  • Piracha, Matloob

    () (University of Kent)

  • Tani, Massimiliano

    () (University of New South Wales)

  • Vaira-Lucero, Matias

    () (Macquarie University, Sydney)


This paper analyses the role of social capital on immigrants' labour market outcomes. We use the "principal component analysis" (PCA) to build an index of social networks and explore its impact on the probability of getting a job and on wage levels using the Households Income and Labour Dynamics in Australia (HILDA) longitudinal survey data. We find a positive effect of social capital on migrants' employment outcomes and wages, especially for women. Distinguishing employment into blue and white-collar jobs, we find that social capital only affects the probability of getting a white-collar job. These results suggest that promoting opportunities to create social capital has a beneficial effect on migrants' integration in the host country.

Suggested Citation

  • Piracha, Matloob & Tani, Massimiliano & Vaira-Lucero, Matias, 2013. "Social Capital and Immigrants' Labour Market Performance," IZA Discussion Papers 7274, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7274

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Calvo-Armengol, Antoni & Zenou, Yves, 2005. "Job matching, social network and word-of-mouth communication," Journal of Urban Economics, Elsevier, vol. 57(3), pages 500-522, May.
    2. H. Battu & P. J. Sloane, 2004. "Over-Education and Ethnic Minorities in Britain," Manchester School, University of Manchester, vol. 72(4), pages 535-559, July.
    3. Samuel Bowles & Herbert Gintis, 2002. "Social Capital and Community Governance," Economic Journal, Royal Economic Society, vol. 112(483), pages 419-436, November.
    4. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    5. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    6. 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.
    7. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    8. Deri, Catherine, 2005. "Social networks and health service utilization," Journal of Health Economics, Elsevier, vol. 24(6), pages 1076-1107, November.
    9. 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.
    10. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
    11. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    12. Green, Colin & Kler, Parvinder & Leeves, Gareth, 2007. "Immigrant overeducation: Evidence from recent arrivals to Australia," Economics of Education Review, Elsevier, vol. 26(4), pages 420-432, August.
    13. Christian Dustmann & Francesca Fabbri, 2003. "Language proficiency and labour market performance of immigrants in the UK," Economic Journal, Royal Economic Society, vol. 113(489), pages 695-717, July.
    14. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    15. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, December.
    16. Wendy Stone & Matthew Gray & Jody Huges, 2004. "Social capital at work How family, friends and civic ties relate to labour market outcomes," Others 0408005, EconWPA.
    17. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    18. Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 27-46, January.
    19. Kerwin Kofi Charles & Jonathan Guryan, 2007. "Prejudice and The Economics of Discrimination," NBER Working Papers 13661, National Bureau of Economic Research, Inc.
    20. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    21. Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:eee:ecoedu:v:61:y:2017:i:c:p:174-190 is not listed on IDEAS
    2. Kalfa, Eleni & Piracha, Matloob, 2015. "Social Networks and the Labour Market Mismatch," IZA Discussion Papers 9493, Institute for the Study of Labor (IZA).
    3. Tani, Massimiliano, 2017. "Local signals and the returns to foreign education," Economics of Education Review, Elsevier, vol. 61(C), pages 174-190.
    4. Bonin, Holger & Rinne, Ulf, 2017. "Report No. 76: Machbarkeitsstudie zur Durchführung einer Evaluation der arbeitsmarktpolitischen Integrationsmaßnahmen für Flüchtlinge," IZA Research Reports 76, Institute for the Study of Labor (IZA).
    5. Chiswick, Barry R. & Wang, Zhiling, 2016. "Social Contacts, Dutch Language Proficiency and Immigrant Economic Performance in the Netherlands: A Longitudinal Study," IZA Discussion Papers 9760, Institute for the Study of Labor (IZA).

    More about this item


    immigrants; labour market; social capital; HILDA survey; Australia;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7274. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.