NATIONAL BUREAU OF ECONOMIC RESEARCH
IAB Institute for Employment Research
NBER Working Papers and Publications
|July 2016||Dynamic Effects of Co-Ethnic Networks on Immigrants' Economic Success|
with Michele Battisti, Giovanni Peri: w22389
This paper investigates how the size of co-ethnic networks at arrival affected the economic success of immigrants in Germany. Applying panel analysis with a large set of fixed effects and controls, we isolate the association between initial network size and long-run immigrant outcomes. Focusing on refugees – assigned to an initial location independently of their choice – allows a causal interpretation of the estimated coefficient. We find that immigrants initially located in places with larger co-ethnic networks are more likely to be employed at first, but have a lower probability of investing in human capital. In the long run they are more likely to be mis-matched in their job and to earn a lower wage.