On the heterogeneous nature of the nexus between social identity and economic outcomes of immigrants

In this chapter, we explore the heterogeneity in the sources and channels whereby group identity influences the labor market performance of immigrants. Using survey data from Italy, we expand our previous findings (Carillo et al., 2021) by showing that group identities asymmmetrically affect immigrants’ economic outcomes according to their socio-demographic characteristics, the political and socio-economic environment of the host country, and their cultural distance from the native population. We find the largest positive effect of social identity for the less protected immigrants, i.e. those who face a more hostile environment or those with individual characteristics that are less adaptable to the new environment. Moreover, we provide evidence that the estimated effect of group membership seems to operate mainly through network externalities and peer effects.