Econometric Analyses of Labour Market Outcome for Immigrants: An Ethnic Spatial Network Approach

Abstract

This PhD research examines the effects of “ethnic capital” on immigrants’ performance in the New Zealand labour market from three aspects: economic assimilation effect, immigrant entrepreneurship (self-employment), and location choices. This research adopts “ethnic capital” as a key concept to explain this phenomenon and to fill the literature gap. In contrast to previous international studies, the “ethnic spatial network approach” is employed to account for ethnic concentration and networks in order to capture the effects of social and resource networks for immigrant groups. This new approach makes a contribution to the international economics literature on immigrant assimilation. This PhD thesis follows a three-essay format. The first essay is the core, focusing on the “assimilation effect” in New Zealand. Previous studies have discovered that Asian immigrants in New Zealand have substantial income disadvantages, in comparison with the New Zealand native-born residents. However, they have not provided sufficient explanations on how the ethnic factors of Asian immigrants influence their assimilation processes. Essay One examines the “assimilation effect”. By comparing immigrant ethnic groups, the analysis identifies the differences between immigrant ethnic groups with regard to the earnings dimension. The second essay is about immigrants’ self-employment in New Zealand. This essay identifies whether and how, ethnic factors help immigrants (especially Asian immigrants) to be self-employed. This analysis shows that the effect of ethnic capital on newly arrived Asian immigrants will be significantly strong. The third essay is about immigrants’ location choices. Ethnic enclaves and other ethnic factors can influence immigrants’ location choices. The effect of ethnic capital on immigrants’ location choices is expected to be significant for Asian immigrants and others whose first language is not English. This PhD thesis confirms that the conventional approach for estimating network effects may fail to capture the real effect of immigrants’ networks and it tends to either under- or over- estimate the effect of other socio-economic variables. This study further shows that the ethnic spatial network approach offers three advantages: it captures a more accurate effect of networks; it provides a better estimation of the impact of other socio-economic variables; and it provides a better data fit. The empirical findings of this study strongly suggest that immigrants tend to assimilate over time, but this effect is significantly affected by immigrants’ ethnic group, local concentration and resources. An ethnic network promotes self-employment among recent immigrants to New Zealand. Furthermore, a strong positive correlation is observed between immigrants’ ethnic networks and their location choices of primary ethnic enclave (especially for Asian immigrants) and resulting positive employment. Finally, the results of this study strongly suggest the greater attention should be given to the role of ethnic capital and immigrant networks in research and policy on the economic assimilation process of immigrants.