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

Author

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  • Fredrik Anderson
  • Simon Burgess
  • Julia Lane
Abstract
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%.

Suggested Citation

  • Fredrik Anderson & Simon Burgess & Julia Lane, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employees," The Centre for Market and Public Organisation 09/219, The Centre for Market and Public Organisation, University of Bristol, UK.
    • Handle: RePEc:bri:cmpowp:09/219
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    File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2009/wp219.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sergio Vergalli, 2011. "Entry and Exit Strategies in Migration Dynamics," Journal of Labor Research, Springer, vol. 32(4), pages 362-389, December.
    2. Sarah Bohn & Sarah Pearlman, 2013. "Ethnic Concentration and Bank Use in Immigrant Communities," Southern Economic Journal, John Wiley & Sons, vol. 79(4), pages 864-885, April.
    3. Yves Zenou, 2013. "Social Interactions and the Labor Market," Revue d'économie politique, Dalloz, vol. 123(3), pages 307-331.
    4. Tao Song & Huanan Xu, 2020. "Anywhere they go, we go: Immigration inflow's impact on co‐ethnic natives in the U.S," Southern Economic Journal, John Wiley & Sons, vol. 87(1), pages 191-215, July.
    5. Damm, Anna Piil, 2014. "Neighborhood quality and labor market outcomes: Evidence from quasi-random neighborhood assignment of immigrants," Journal of Urban Economics, Elsevier, vol. 79(C), pages 139-166.
    6. Patacchini, Eleonora & Zenou, Yves, 2012. "Ethnic networks and employment outcomes," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 938-949.
    7. Aparicio Fenoll, Ainoa, 2011. "Network Effects on Migrants' Remittances," IZA Discussion Papers 5657, Institute of Labor Economics (IZA).
    8. Nabanita Datta Gupta & Lene Kromann, 2014. "Differences in the labor market entry of second-generation immigrants and ethnic Danes," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.
    9. Ian M. Schmutte, 2015. "Job Referral Networks and the Determination of Earnings in Local Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 33(1), pages 1-32.
    10. Julia Beckhusen & Raymond J.G.M. Florax & Thomas Graaff & Jacques Poot & Brigitte Waldorf, 2013. "Living and working in ethnic enclaves: English Language proficiency of immigrants in US metropolitan areas," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 305-328, June.
    11. Strom, Steinar & Venturini, Alessandra & Villosio, Claudia, 2013. "Wage Assimilation: Migrants versus Natives and Foreign Migrants versus Internal Migrants," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201341, University of Turin.
    12. Luisa Alamá-Sabater & Maite Alguacil & Joan Serafí Bernat-Martí, 2014. "Location determinants of migrant inflows: The Spanish case?," Working Papers 2014/07, Economics Department, Universitat Jaume I, Castellón (Spain).
    13. Del Bello, Carlo L. & Patacchini, Eleonora & Zenou, Yves, 2015. "Neighborhood Effects in Education," IZA Discussion Papers 8956, Institute of Labor Economics (IZA).
    14. Öner, Özge & Klaesson, Johan, 2018. "Ethnic Enclaves and Labor Market Outcomes – What Matters Most: Neighborhood, City or Region?," Working Paper Series 1251, Research Institute of Industrial Economics.
    15. Johan Klaesson & Özge Öner, 2021. "Ethnic enclaves and segregation—self-employment and employment patterns among forced migrants," Small Business Economics, Springer, vol. 56(3), pages 985-1006, February.

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    More about this item

    Keywords

    Social networks; immigrant enclaves; labor market intermediaries;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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