Social capital in the mobilisation of human capital

It is commonly argued that in ageing OECD economies, labour supply should be increased so that it would meet the demand when the working-age age cohorts decrease. The OECD has argued that foreign immigration would play a key role in increasing the supply. While these approaches seem to be well grounded, foreign immigrants in the OECD countries face persistent labour market deprivation: their labour market status are rarely in line with their education and other forms of human capital, while in the case of natives, the situation is much better. This equals both squandering of human capital and misery, bringing challenges to both economic sustainability/productivity and social cohesion. This article focuses on how different theories seek to explain the problem. Statistical evidence suggests that immigrants’ labour market deprivation is not caused by the lack of human capital (e.g. education) but instead the lack of opportunities in using their skills. Certain kinds of social networks (social capital) are suggested to bring more out of these opportunities. These networks seem to be needed to improve immigrants’ labour market status in the OECD countries.