Learning through Contact? The Effects on Earnings of Immigrant Exposure to the Native Population

Factors influencing immigrant labour-market outcomes have received increased scholarly attention lately. A recent research focus has been the effects of residential setting on labour-market outcomes. This study brings a new dimension to this emerging body of research, introducing the role played by workplace composition, in addition to place of residence, in immigrant earnings. Based on Swedish longitudinal register data, ordinary least squares regression is used to examine effects of previous exposure to natives on earnings in three immigrant cohorts (1990, 1995, and 2000) five years after arrival. Besides controlling for individual characteristics and various labour-market attributes, a two-step Heckman correction procedure is applied to take into account the selectivity of entering the Swedish labour market. The main finding of the study is that exposure to the native population at the workplace is more important than residential exposure for predicting immigrant earnings.