Social capital and the wealth accumulation of immigrants in Australia

Immigrants' social capital, intended as the set of personal networks that could support immigrants' economic interests, is generally recognized as being associated with their economic success in the host country. This paper addresses some of the discussions in the literature regarding components and measurement of social capital and the possible link with migrants' investment and savings habits. It looks at the role of social capital/personal networks on the net wealth accumulation patterns of immigrants to Australia, particularly their possessions of real estate assets as own home or investments. Using information unique to the Households Income and Labour Dynamics in Australia Survey (HILDA) and applying random-effects and population averaged logit model (generalized estimating equations or GEE) to control for unobserved heterogeneity, we find that the social capital variables affect positively the probability of migrants' allocation of wealth into property assets. Social capital variables appear to be important to explain the differences in level of wealth accumulated into non-financial assets when compared to the Australian-born. Policies promoting ethnically diverse networks facilitate the integration of migrants could help to channel more of their wealth into the Australian economy.