Tetyana Surotseva - Research Summary

In this paper I develop a theoretical framework that integrates immigrant network of heterogeneous qualities, and decisions about cultural assimilation and investment in education into the context of labour market with asymmetric information. I illustrate how network quality shapes individual incentives to acquire education and to assimilate. For instance, while low quality networks lead to lower investment in education, high quality networks do not distort incentives to get education, but they do crowd out individual incentives to assimilate. This model also generates some predictions as to immigrant network formation that help explain differences in patterns of assimilation and labour market adjustment between and within immigrant groups. Using census data on first- and second-generation immigrants in the United States, I find that all the patterns predicted by the model also appear in the data.