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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 December 2016

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 propose a theoretical model predicting that immigrants with more contacts in the host country have additional access to job offers, and are therefore better able to become employed and choose higher paid jobs. Our empirical analysis confirms these findings, while focusing more generally on the relationship between migrants’ social networks and a variety of labor market outcomes (namely wages, employment, occupational choice and job security), which is broader than the existing literature. We find evidence that having one more close contact person in the host country is associated with an increase of 11pp in the probability of being employed and with an increase of about 100 euros in the average monthly net salary. However, our data is not supportive of a network size effect on occupational choice and job security. Our findings are robust to sample selection and other endogeneity concerns.

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