Abstract

Labor market integration programs affect not only immigrants’ economic outcomes but also their social integration. In this paper, I analyze how measures of social integration, like the share of marriages with natives and immigrants’ spatial concentration, change under different policy scenarios. I first show correlations between immigrants’ labor market outcomes, marital patterns, and spatial distribution. Then, using German data, I estimate a structural model with location, marriage, and labor supply decisions. The model reflects two trade-offs immigrants face: a) partner choice: ”marry your like” vs. economic gains from marriage with a native, and b) location choice: a region with higher wages vs. a region with better marriage opportunities. Model simulations reveal that: 1) reducing the immigrant-native income gap by 25% decreases immigrants’ spatial concentration (by 2.9%), but lowers the share of immigrant women married to natives (by 2 pp); 2) declining the regional wage gap by 50% significantly reduces immigrants’ spatial concentration (by 15%), increases the share of immigrant men married to native (by 1.1 pp), but decreases the share of immigrant women married to natives (by 0.6 pp). I also find that ignoring adjustments in location and marriage choices under both policies overstates the decrease in immigrant-native income inequality and underpredicts the welfare gains. The reason for that is when immigrants’ labor market position improves, they give up part of their income gains and marry natives less often to satisfy their taste for similarity in partners’ origin, increasing their welfare.