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Neighbourhood Effects, Preference Heterogeneity and Immigrant Educational Attainment


  • Buly A Cardak

    () (School of Economics, La Trobe University)

  • James Ted McDonald

    () (School of Economics, University of New Brunswick School of Economics, La Trobe University)


This paper investigates differences between the educational attainment immigrants and native born individuals in Australia by using Australian Youth Survey (AYS) data combined with aggregate Australian Census data. We decompose differences in educational attainment into: (i) typical demographic and socio-economic sources common to all ethnic groups, (ii) unobserved region of residence and region of origin effects, and (iii) neighbourhood effects such as degree and ethnic concentration of particular ethnic groups in different neighbourhoods. A theoretical model incorporating these effects is proposed but structural estimation is not possible for lack of appropriate data. Instead, a reduced form methodology is proposed and employed. The empirical results identify positive ethnic neighbourhood effects in high school completion and university enrolment for some immigrants to Australia, in particular first and second generation immigrants from Asia. The results indicate that it is not just the size of the ethnic network but the quality of the network that is important.

Suggested Citation

  • Buly A Cardak & James Ted McDonald, 2002. "Neighbourhood Effects, Preference Heterogeneity and Immigrant Educational Attainment," Working Papers 2002.02, School of Economics, La Trobe University.
  • Handle: RePEc:trb:wpaper:2002.02

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    References listed on IDEAS

    1. Chiswick, Barry R. & Miller, Paul W., 1994. "The determinants of post-immigration investments in education," Economics of Education Review, Elsevier, vol. 13(2), pages 163-177, June.
    2. Ira N. Gang & Klaus F. Zimmermann, 2000. "Is Child like Parent? Educational Attainment and Ethnic Origin," Journal of Human Resources, University of Wisconsin Press, vol. 35(3), pages 550-569.
    3. Julian R. Betts & Magnus Lofstrom, 2000. "The Educational Attainment of Immigrants: Trends and Implications," NBER Chapters,in: Issues in the Economics of Immigration, pages 51-116 National Bureau of Economic Research, Inc.
    4. Marianne Bertrand & Erzo F. P. Luttmer & Sendhil Mullainathan, 2000. "Network Effects and Welfare Cultures," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 1019-1055.
    5. Ira N. Gang, 1997. "Schooling, Parents and Country," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(1), pages 180-186.
    6. Cardak, B.A., 1998. "Preferences Over Education Expenditure," Department of Economics - Working Papers Series 623, The University of Melbourne.
    7. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    8. Chiswick, Barry R & Miller, Paul M, 1996. "Ethnic Networks and Language Proficiency among Immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 9(1), pages 19-35, February.
    9. Cardak, Buly A, 1999. "Heterogeneous Preferences, Education Expenditures and Income Distribution," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 63-76, March.
    10. Barry R. Chiswick, 1988. "Differences in Education and Earnings Across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 571-597.
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    Cited by:

    1. Lindvall, Lars, 2009. "Neighbourhoods, economic incentives and post compulsory education choices," Working Paper Series 2009:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. repec:pri:crcwel:wp11-11-ff is not listed on IDEAS
    3. Nieuwenhuis, Jaap & Hooimeijer, Pieter & van Ham, Maarten & Meeus, Wim, 2013. "Neighbourhood Effects on Migrant Youth's Educational Commitments: An Enquiry into Personality Differences," IZA Discussion Papers 7510, Institute for the Study of Labor (IZA).
    4. Danzer, Alexander M. & Ulku, Hulya, 2008. "Determinants of Integration and its Impact on the Economic Success of Immigrants: A Case Study of the Turkish Community in Berlin," IZA Discussion Papers 3762, Institute for the Study of Labor (IZA).
    5. Siahaan, Freddy & Lee, Daniel Y. & Kalist, David E., 2014. "Educational attainment of children of immigrants: Evidence from the national longitudinal survey of youth," Economics of Education Review, Elsevier, vol. 38(C), pages 1-8.
    6. Jessica Yiu, 2011. "The School Readiness of the Children of Immigrants in the United States: The Role of Families, Childcare and Neighborhoods," Working Papers 1314, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing..
    7. NONNEMAN, Walter, 2012. "School achievement and failure of immigrant children in Flanders," Working Papers 2012008, University of Antwerp, Faculty of Applied Economics.
    8. Klaus Nowotny & Dieter Pennerstorfer, 2011. "Ethnic Networks and the Location Choice of Migrants in Europe," WIFO Working Papers 415, WIFO.

    More about this item


    Immigrants; Education; Neighbourhood Effects; Preference Heterogeneity;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population


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