| Author/Presenter |
Li Xue (University of Ottawa) |
| Title |
Social capital and wages outcome of recent immigrants to Canada |
| Abstract |
This paper studies the interactions between social capital and immigrants' wages, drawing upon the Longitudinal Survey of Immigrants to Canada (LSIC). The research builds indicators of social capital based on a network-based concept using information unique to the LSIC, considering the types of networks (kinship, friendship, organization) and their content (size, diversity, density, quality). Based on these social capital indicators, the paper attempts to deal with some of the difficulties faced by previous studies on returns to social capital. First, taking advantage of the longitudinal nature of the LSIC, the paper takes into account unobserved individual heterogeneity by using panel data models. Second, the suspected correlation between social capital and unobserved individual ability motivates the study to treat social capital as endogenous with unobserved heterogeneity. An estimator proposed by Hausman and Taylor (1981) is used to take into account this endogeneity. The Hausman-Taylor estimator is then shown to be efficient and consistent, and it is favoured over other panel data estimators, including the instrumental variable (IV) models. The results show that social capital variables have important effects on immigrant wages during their first four years in Canada. Strong ties such as family networks and friends dominate weak ties such as organizations in helping immigrants get better jobs in terms of higher wages during their first four years in Canada. This is true especially for those who are disadvantaged with respect to their human capital. The results show that social capital adds to human capital in getting immigrants higher wages. Meanwhile, the ethnic diversity of the workplace network is the most influential factor within social capital that affects wages for both male and female immigrants. |
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