Entering the mainstream economy? Workplace segregation and immigrant assimilation

Abstract

Why do foreign-born immigrant workers often concentrate in low-wage, minority-dense workplaces? Do immigrants’ native-born children—who typically acquire better language skills, education, and country-specific knowledge—experience improved access to workplaces in the mainstream economy? Using economy-wide linked employer–employee administrative data from Norway, we analyze both ethnic and economic workplace segregation across immigrant generations. We find that, on average, 32% of immigrants’ coworkers and 16% of second-generation immigrants’ coworkers have immigrant backgrounds, compared to 7% for natives. In terms of economic segregation, the average percentile rank of coworkers’ salaries is 36, 49, and 52 for immigrants, children of immigrants, and natives, respectively. A formal decomposition analysis shows that differences in employee, workplace, and residential location characteristics collectively explain 54–74% of ethnic and 79–84% of economic workplace segregation for immigrants and their children. Key factors driving this segregation in both immigrant generations include education, occupational attainment, industry of employment, having an immigrant manager, and the concentration of immigrant neighbors. This suggests that both skill-based sorting and network-related processes contribute to immigrant–native workplace segregation. However, children of immigrants’ improved access to less immigrant-dense and higher-paying workplaces, compared to immigrants, is primarily driven by differential skill-based sorting (i.e., higher education and shifts in occupation and industry placement). Our findings reveal a sharp decline in workplace segregation relative to natives as children of immigrants advance into the mainstream economy, highlighting the central role of assimilation in skill profiles for workplace integration across immigrant generations.