Cities: Catalysts or roadblocks in labor market desegregation?

Austria has recently surpassed traditional immigrant countries such as the US and Canada in terms of the relative size of its foreign-born population. Within Austria, the majority – about 40% – of immigrants live in Vienna, representing 50% of the city’s population. Such patterns are not uncommon: large cities have long been viewed as “escalators”, offering access to a large number and variety of job and educational opportunities. However, cities may also facilitate segregation. The presence of large immigrant communities helps newcomers connect to other immigrants, possibly to the detriment of connections outside these communities. This may lead to stratification of social networks along ethnic lines. Because networks are important in finding jobs, such stratification reduces the visibility of, and access to, job opportunities. Consequently, it is a priori unclear whether immigrants derive net benefits or costs from locating in large cities.

Ethnic segregation is often studied in terms of residential patterns, but less is known about segregation across workplaces. Here, we ask to what extent the workforces of economic establishments consist of workers with similar ethnic backgrounds and genders. We study such workplace segregation for Austria between 2008 and 2022, leveraging large-scale administrative datasets that record the exact composition of workers for each establishment in the country. Next, we ask whether workplace segregation is related to the professional networks that are formed among current and former coworkers. Finally, we study the role of cities, asking whether networks and workplace segregation differ across cities and whether the relation between professional networks and workplace segregation depends on city size. This will reveal how cities shape networks and careers and whether they exacerbate or alleviate workplace segregation.

In a first stage, we analyze how the nature and geography of workplace segregation and of professional networks in Austria have evolved between 2008 and 2022. Next, we study how workplace segregation is associated with professional networks and city size. Finally, we ask how networks and workplace segregation relate to employment and wages.

In a second stage, we focus on workers who were displaced from their jobs in establishment closures. This focus ensures that we compare workers looking for jobs who lost their old jobs for reasons unrelated to their performance. To construct counterfactual career paths had these workers not been displaced, we match them to observationally similar nondisplaced workers. This allows us to compare actual to counterfactual career paths for different groups of displaced workers to uncover the causal relations between professional networks, labor market outcomes and workplace segregation, and how cities may affect these relations. The latter will contribute to our understanding of if and how cities help or hinder workplace segregation.