Immigrants’ Social Capital and Labor Market Performance: The Effect of Social Ties on Earnings and Occupational Prestige*

Abstract

ObjectivesWhile a growing body of literature investigates the role of social capital in the labor market outcomes of immigrants, the verdict is still out on whether or not reliance on social networks enhances or constrains labor market performance. This study explores the effect of relying on social ties to find a job on the hourly earnings and occupational prestige of new legal immigrants in the United States.MethodsUtilizing data from the New Immigrant Survey 2003 cohort, the effect on occupational outcomes of relying on social ties to locate a job is estimated using both ordinary least squares (OLS) regression and propensity score matching (PSM), to minimize observable selection bias. Propensity score matching is used to identify the treatment effect of using social contacts by comparing the outcomes of closely matched treatment and control groups.ResultsBoth OLS and PSM estimates indicate that using a close contact to find a job has a detrimental effect on earnings and occupational prestige. The effect of social capital, however, varies across groups. Particularly, while social capital has little or no effect on the labor market outcomes of black and Hispanic immigrants, it has a detrimental effect on the occupational prestige of Asian and white immigrants (the effect being stronger for Asians than for whites).ConclusionSocial capital research on immigrants’ outcomes should, therefore, take caution in generalizing from group‐specific research, as these findings point to contextual labor market effects of social capital.