Entering the Mainstream Economy? Workplace Segregation and Immigrant Assimilation

Abstract

Why do immigrants often concentrate in low-wage workplaces with high shares of minority employees? Is workplace segregation relative to natives declining among native-born descendants of immigrants—who often achieve higher acculturation and socioeconomic progress—compared to the immigrant generation? Using rich linked employer-employee administrative data from Norway, we show that, on average, 37% and 24%, respectively, of immigrants’ and their descendants’ coworkers have immigrant background compared to 9% among natives. For economic segregation, the percentile rank of coworkers’ salary is, on average, 36, 50, and 52 for immigrants, descendants, and natives, respectively. Using information on characteristics of employees, workplaces, and residential neighborhoods, a formal decomposition shows that these factors collectively explain 33-68% and 78-80% of ethnic and socioeconomic workplace segregation, respectively, for both immigrants and their descendants. Within both generations, workers’ education and labor market attainments, industry of employment, and share of immigrant neighbors contribute most to workplace segregation relative to natives. Overall, our findings reveal a sharp decline in workplace segregation across immigrant generations, where the second generation gain improved access to workplaces in the mainstream economy.

Blending In or Moving On? Workplace Ethnic Diversity, Immigrant Assimilation, and Employee Turnover

“…We also contribute to the growing literature emphasizing how organizational are central to the generation labor market inequality (Tilly 1998, Tomaskovic-Devey andAvent-Holt 2019). A recent stream of research shows that unequal sorting of immigrant and native workers into different workplaces is consequential for earnings inequality (Andersson et al 2014, Barth, Bratsberg and Raaum 2012, Dostie et al 2021, Lillehagen and Hermansen 2022. In particular, when immigrant minorities increase their relative group size and gain access to managerial ranks, this often has a beneficial impact on hiring and their organizational inequality, such as reduced pay gaps relative to native coworkers (Melzer et al 2018, Tomaskovic-Devey, Hällsten and Avent-Holt 2015, Åslund, Hensvik and Skans 2014.…”

“…Norway, which stand out from the non-migrant native population due to differences in names, skin color, religious practices, and other related characteristics. Moreover, non-European immigrant minorities often have little formal qualifications, face difficulties in entry into paid work, and, when in employment, are overrepresented in low-paid manual occupations and immigrant-dense workplaces (Bratsberg, Raaum and Røed 2014, Drange and Helland 2019, Lillehagen and Hermansen 2022. In contrast, members of the native-born second generation often make considerable intergenerational gains in education and the labor market compared to their immigrant parents (Hermansen 2016, Lillehagen andHermansen 2022).…”

“…Moreover, non-European immigrant minorities often have little formal qualifications, face difficulties in entry into paid work, and, when in employment, are overrepresented in low-paid manual occupations and immigrant-dense workplaces (Bratsberg, Raaum and Røed 2014, Drange and Helland 2019, Lillehagen and Hermansen 2022. In contrast, members of the native-born second generation often make considerable intergenerational gains in education and the labor market compared to their immigrant parents (Hermansen 2016, Lillehagen andHermansen 2022). Nonetheless, ethnic discrimination of both immigrants and their native-born children at the point is also welldocumented in Norway (Larsen andDi Stasio 2021, Quillian et al 2019).…”

“…Persons of mixed origin (i.e., one Norwegian-born and one foreign-born parent) are excluded. Further, we only include immigrant-background employees of non-European background (i.e., the Middle East, Africa, Asia, and Latin America), as immigrants from these world regions often constitute salient visible minorities and typically face the largest labor market disadvantages (Bratsberg, Raaum and Røed 2014, Drange and Helland 2019, Lillehagen and Hermansen 2022. 3 Next, we restrict the analytic sample to workplaces with at least 10 employees, since workplaces with very few employees are sensitive to noise through small compositional changes across adjacent years.…”

“…Policy makers and social scientists alike show increasing interest in the consequences of rising ethnic diversity and the growing presence of immigrant-background workers for organizational inequality and ethnic stratification in European and North American labor markets (DiTomaso, Post and Parks-Yancy 2007, Dostie et al 2021, Drouhot and Nee 2019, Heath and Cheung 2007, Peters and Melzer 2022, Tomaskovic-Devey, Hällsten and Avent-Holt 2015. However, increasing numbers of immigrant minorities in the workforce will not necessarily lead to increased exposure between immigrant-background ethnic minorities and the native-born ethnic majority at work, since ethnic workplace segregation is often widespread (Andersson et al 2014, Glitz 2014, Hellerstein and Neumark 2008, Lillehagen and Hermansen 2022, Strömgren et al 2014, Åslund and Skans 2010. Ethnic segregation and workplace diversity is ultimately the result of historical patterns of bias in the inflow and outflow of new and old employees, (Bygren 2013, Reskin, McBrier and Kmec 1999, Tsui and Gutek 1999.…”