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Assessing the Role of Social Networks on Migrant Labor Market Outcomes

NOVAFRICA working paper series
Catia Batista

Nova School of Business and Economics, CReAM, IZA, and NOVAFRICA

Ana Isabel Costa

Nova School of Business and Economics and NOVAFRICA

 

ISSN 2183-0843
Working Paper No 1601
April 2016
Revised January 2018

Abstract

What role do social networks play in determining migrant labor market outcomes? We examine this research question using a random survey of 1500 immigrants living in Ireland. We empirically test the hypothesis that immigrants with more contacts in the host country perform better in the labor market. Our empirical analysis confirms this prediction by focusing broadly on the relationship between migrants’ social networks and a variety of labor market outcomes (namely wages, employment, occupational choice and job security), innovatively relative to the existing literature. We find evidence that having one more close contact person in the host country is associated with an increase of nearly 100 euros in the average monthly net salary, and with a higher probability of having a permanent job contract. Network size also seems to have a positive impact in the probability of migrants entering low-skilled occupations, but no effect on high-skilled occupations. Our data is not strongly supportive of a network size effect on employment. Our results are robust to sample selection and other endogeneity concerns. Overall, this paper expands previous findings in the literature mostly focused on wages and employment, and concludes that networks may also provide job security to immigrants.

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