The effect of social networks on migrants' labor market integration: A natural experiment

Empirically identifying the causal effect of social networks on migrants' economic prospects is a challenging task due to the non-random residential sorting of migrants into locations with greater opportunities for (previous) connections. Our study addresses this selection-bias issue by using a unique natural-experimental dataset of refugees and other migrants that were exogenously allocated to their first place of residence by German authorities. The empirical results reveal a positive causal effect of social networks on migrants' transition rate to the first job, but only if the networks are mobilized for the job search.