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Neighborhood Quality and Labor Market Outcomes: Evidence from Quasi-Random Neighborhood Assignment of Immigrants

  • Anna Piil Damm

    ()

    (Department of Economics and Business, Aarhus University)

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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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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  1. 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.
  2. 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.
  3. Åslund, Olof & Rooth, Dan-Olof, 2003. "Do when and where matter? Initial labor market conditions and immigrant earnings," Working Paper Series 2003:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Blau, David M & Robins, Philip K, 1990. "Job Search Outcomes for the Employed and Unemployed," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 637-55, June.
  5. Dustmann, Christian & Glitz, Albrecht & Schönberg, Uta, 2011. "Referral-based Job Search Networks," IZA Discussion Papers 5777, Institute for the Study of Labor (IZA).
  6. Michele Pellizzari, 2004. "Do Friends and Relatives Really Help in Getting a Good Job?," CEP Discussion Papers dp0623, Centre for Economic Performance, LSE.
  7. 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.
  8. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
  9. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
  10. Edin, Per-Anders & Fredriksson, Peter & Åslund, Olof, 2000. "Ethnic enclaves and the economic success of immigrants - evidence from a natural experiment," Working Paper Series 2000:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  11. Bruce A. Weinberg & Patricia B. Reagan & Jeffrey J. Yankow, 2004. "Do Neighborhoods Affect Hours Worked? Evidence from Longitudinal Data," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 891-924, October.
  12. John T. Addison & Pedro Portugal, 1998. "Job Search Methods and Outcomes," Working Papers w199808, Banco de Portugal, Economics and Research Department.
  13. Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
  14. Philip Oreopoulos, 2003. "The Long-Run Consequences Of Living In A Poor Neighborhood," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1533-1575, November.
  15. Topa, Giorgio, 1997. "Social Interactions, Local Spillovers and Unemployment," Working Papers 97-17, C.V. Starr Center for Applied Economics, New York University.
  16. Andersson, Fredrik & Burgess, Simon & Lane, Julia, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment," IZA Discussion Papers 4423, Institute for the Study of Labor (IZA).
  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 1407-18, December.
  18. Brian A. Jacob, 2004. "Public Housing, Housing Vouchers, and Student Achievement: Evidence from Public Housing Demolitions in Chicago," American Economic Review, American Economic Association, vol. 94(1), pages 233-258, March.
  19. Harry J. Holzer, 1986. "Search Method Use by Unemployed Youth," NBER Working Papers 1859, National Bureau of Economic Research, Inc.
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