Immigrants’ earnings and neighbourhood economic wealth: the conditioning role of citizenship

Abstract

Do higher earnings translate into better living conditions for immigrants? While spatial assimilation theory argues that residential patterns reflect economic assimilation, place stratification theory states that immigrants face structural obstacles in their search for better housing, including housing market discrimination. Existing scholarship does not facilitate distinguishing between these contrasting perspectives as analyses typically compare across immigrant groups and natives. By contrast, we focus in this paper on legal status discrimination within the immigrant population in the Netherlands, by testing whether citizenship acquisition provides a positive signal towards housing market actors and moderates the effect of income on residential mobility. We analyse this relation using administrative microdata and using fixed-effects models to control for selection into naturalisation due to unobserved time-invariant heterogeneity. We find that the relation between income gains and immigrants' propensity to live in wealthier neighbourhoods is stronger for naturalised immigrants. These results corroborate the place stratification argument and suggest that naturalisation may help reduce nationality based discrimination.