The Interrelation of Immigrants’ Interethnic Ties and Socioeconomic Status in Germany. An Autoregressive Panel Analysis

Abstract

This paper analyses the causality between interethnic ties and socioeconomic status (SES) for Italian, Turkish and former Yugoslavian immigrants in Germany. Referring to social capital theory and its inherent problem of homophily, the interrelation between these two constructs remains ambiguous. The data come from the German socioeconomic panel study. After demonstrating the drawbacks of existing empirical studies on this issue, results of fixed effects panel regressions and autoregressive cross-lagged panel models (ARM) with latent variables are presented. In this respect, the latter are considered more appropriate to tackle the formulated questions. To counter common criticism of ARM, an unmeasured variable model is computed in order to control for spurious relationships. After accounting for simultaneity, reverse causality and unobserved heterogeneity, the interethnic ties of immigrants positively influence the respondents' SES. In the strictest test, no significant reverse effect remains. Hence, the results support social capital theory.

Does Ethnicity Affect Ever Migrating and the Number of Migrations? The Case of Indonesia

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