Do Immigrants have Better Labour Market Outcomes than South Africans?

Abstract

We use data from the ten percent sample of the 2011 Census to explore labour market outcomes among immigrants and locals in South Africa. We show that naturalised immigrants and foreigners engage more successfully with the labour market than locals on average. The ability to access social networks improves labour market access for immigrants, but sequentially controlling for observable characteristics, including networks and location, decreases immigrants' participation and employment advantage over locals. The conditional immigrant earnings gap is negative, but because immigrants typically work in low quality jobs, their relative earnings disadvantage is entirely explained by differences in workers' occupations and industries. Our attempts to control for the possible endogeneity of immigrant status suggest that the direction of selection bias may be different for naturalised and foreign immigrants in South Africa, reinforcing the importance of distinguishing between different immigrant groups in research of this nature.