Migrant poverty and social capital: The impact of intra- and interethnic contacts

Abstract

Previous research on immigrant economic incorporation has predominantly focused on dimensions of labor market access, while income poverty and its determinants have not yet received as much attention. The present study sets out to address this gap, and it has a particular focus on the relative utility of intra- and interethnic contacts. Applying social capital considerations, we investigate to what extent German first generation immigrants’ relationships in terms of the ethnic composition of their friendships and family size influence their likelihood of income poverty, net of various other factors. We furthermore ask whether the returns on interethnic contacts are dependent on immigrants’ host country language proficiency, a pivotal type of cultural competence. Using the German Socio-Economic Panel Study, we find that both types of social relationships help to reduce poverty, which diverges from previous findings for labor market outcomes. Moreover, the utility of interethnic relationships varies according to language proficiency. These results illustrate the complex interrelations between cultural, social and economic integration, and they help to advance our understanding about the potential benefits of intra- and interethnic social capital by showing that both are useful in averting immigrant income poverty.