How important is the integration of immigrants in society for labour market outcomes? In this paper we examine the effect of residential segregation on labour market outcomes, exploiting the random assignment of asylum seekers to municipalities in the Netherlands. Using Dutch administrative data of the period 1995-2004, we know all consecutive places and status of residence, country of origin, and labour market income of the working population at the level of postal code areas. OLS estimates suggest that segregation has a strong negative effect on labor market outcomes (employment and wages). Using initial placement as an instrument reveals however that in a linear specification the effect of neighborhood concentration for both outcome variables is close to zero and insignificant. Also taking into account other characteristics of a neighborhood leads to a positive effect of concentration on outcomes, especially for high concentration neighborhoods. Immigrants who move to high concentration neighborhoods tend to benefit much from such concentrated environments. |
