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Network Formations among Immigrants and Natives

Author

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  • Epstein, Gil S.

    (Bar-Ilan University)

  • Heizler (Cohen), Odelia

    (Academic College of Tel-Aviv Yaffo)

Abstract

In this paper we examine possible network formations among immigrants and natives with endogenous investment. We consider a model of a network formation where the initiator of the link bears its cost while both agents benefit from it. We present the model by considering possible interactions between immigrants and the new society in the host country: assimilation, separation, integration and marginalization. The paper highlights different aspects of immigrants’ behavior and their interaction with the members of the host country (society) and their source country (society). We found that when the stock of the immigrants in the host country increases, the immigrants' investment in the middlemen increases and the natives may bear the cost of link formation with the middlemen.

Suggested Citation

  • Epstein, Gil S. & Heizler (Cohen), Odelia, 2009. "Network Formations among Immigrants and Natives," IZA Discussion Papers 4234, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4234
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    References listed on IDEAS

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    1. Thomas Bauer & Gil Epstein & Ira Gang, 2005. "Enclaves, language, and the location choice of migrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(4), pages 649-662, November.
    2. Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009. "An Economic Model of Friendship: Homophily, Minorities, and Segregation," Econometrica, Econometric Society, vol. 77(4), pages 1003-1045, July.
    3. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
    4. Dustmann Christian & Preston Ian P, 2007. "Racial and Economic Factors in Attitudes to Immigration," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-41, November.
    5. Galeotti, Andrea & Goyal, Sanjeev & Kamphorst, Jurjen, 2006. "Network formation with heterogeneous players," Games and Economic Behavior, Elsevier, vol. 54(2), pages 353-372, February.
    6. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    7. Holzer, Harry J, 1987. "Informal Job Search and Black Youth Unemployment," American Economic Review, American Economic Association, vol. 77(3), pages 446-452, June.
    8. Battu, Harminder & Seaman, Paul & Zenou, Yves, 2011. "Job contact networks and the ethnic minorities," Labour Economics, Elsevier, vol. 18(1), pages 48-56, January.
    9. Watts, Alison, 2001. "A Dynamic Model of Network Formation," Games and Economic Behavior, Elsevier, vol. 34(2), pages 331-341, February.
    10. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    11. Kahanec, Martin, 2006. "Ethnic Specialization and Earnings Inequality: Why Being a Minority Hurts but Being a Big Minority Hurts More," IZA Discussion Papers 2050, Institute of Labor Economics (IZA).
    12. Borjas, George J., 1998. "To Ghetto or Not to Ghetto: Ethnicity and Residential Segregation," Journal of Urban Economics, Elsevier, vol. 44(2), pages 228-253, September.
    13. Kim, Chongmin & Wong, Kam-Chau, 2007. "Network formation and stable equilibrium," Journal of Economic Theory, Elsevier, vol. 133(1), pages 536-549, March.
    14. Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, University Library of Munich, Germany.
    15. Watts, Alison, 2002. "Non-myopic formation of circle networks," Economics Letters, Elsevier, vol. 74(2), pages 277-282, January.
    16. Chiswick, Barry R & Miller, Paul M, 1996. "Ethnic Networks and Language Proficiency among Immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 9(1), pages 19-35, February.
    17. Locher, Lilo, 2004. "Immigration from the former Soviet Union to Israel: Who is coming when?," European Economic Review, Elsevier, vol. 48(6), pages 1243-1255, December.
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    Citations

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    Cited by:

    1. Gil S. Epstein & Odelia Heizler (Cohen), 2016. "Networks in the Diaspora," RF Berlin - CReAM Discussion Paper Series 1604, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    2. Gil S. Epstein & Odelia Heizler (Cohen), 2016. "The formation of networks in the diaspora," International Journal of Manpower, Emerald Group Publishing Limited, vol. 37(7), pages 1136-1153, October.

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    More about this item

    Keywords

    assimilation and separation; social networks; network formations;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics

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