ARCHIVED – Social Capital and Employment Entry of Recent Immigrants to Canada

1. Introduction

There is growing evidence that the economic outcomes of recent immigrants declined in comparison with earlier cohorts (e.g. Bloom, Grenier and Gunderson 1995; Picot, Hou and Coulombe 2007). Examining the determinants of labour market outcomes for recent immigrants, including social capital components, is an essential step in understanding this phenomenon. In light of the difficulties of recent immigrants to assimilate into the Canadian labour market, the role of social capital as a mechanism for understanding the socio-economic progress of immigrants is increasingly prompting public interest (Kunz 2005).  Different definitions of social capital have been used to examine broad contexts such as educational attainment (Sun 1999; Israel and Beaulieu 2004), job search (Montgomery 1991), and health services utilization (Deri 2005). While it is often argued that immigrants are at a disadvantage in the labour market because they have less social capital than natives (Aguilera 2003; Sanders, Nee and Sernau 2002), most of the research into the determinants of labour market outcomes has focused on the role of human capital and the structure of the labour market. Limited attention has been paid to the empirical investigation of the influence of social networks on the economic performance of newcomers, let alone to a potential correlation between social capital and labour market outcomes.

This paper addresses these gaps through an empirical analysis of the relationship between social capital and employment likelihood of recent immigrants to Canada, taking the advantages of a recent dataset --- the Longitudinal Survey of Immigrants to Canada (LSIC) Wave 1, 2 and 3 micro data. The LSIC provides unique information on immigration class, ethnic group, social interactions and labour market performance, which is required for my analysis. Furthermore, its longitudinal nature affords the possibility of a panel data analysis to examine the role of social capital.

The analysis tries to answer the following questions: Does social capital based on networks play a role in recent immigrant economic integration? Do different sizes and types of social capital lead to different outcomes in labour force status? How do immigrants with a more co-ethnic social network perform relative to those with a diversified network?

The research contributes to the existing literature on immigrant labour market outcomes in several ways. First, using information unique to the LSIC, it builds multidimensional indicators of social capital based on a network-based concept: the types of networks (kinship, friendship, organizations) and their dimensions (size, diversity, density and quality). Second, the study reveals significant variability in the presence of social networks at landing and in the social capital stock across immigration classes and ethnic groups. The analysis also shows that social capital stock, as measured by various indicators, influences the probability of employment in the initial four years. Possibly through a more ethnically diverse network, social capital plays an important role in facilitating economic assimilation of recent immigrants in terms of a higher probability of getting employment. Finally, employing panel data modelling, individual specific effects are taken into account, an issue that has not been addressed much in the immigrant labour market outcomes literature.

The paper is structured as follows. After reviewing the literature, the paper discusses the data and methodology issues as well as the model framework. Construction of social capital indicators and descriptive analysis are then presented, followed by empirical results from estimation of the econometric model. Conclusions are made at the end of the paper.

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