The Costs of Adapting to a New Cultural Environment: Examining Immigrants ’ Outcomes

This paper investigates the consequences of a change in cultural environment. Because any given cultural environment changes very slowly, I address this topic by examining immigrants ’ socio-economic outcomes. Using variation in the cultural distance between immigrants ’ birth and host countries and individual-level data from Europe and the US, I find that an increase of one standard deviation in cultural distance decreases an immigrant’s expected weekly earnings by 7.2 % and increases the probability of being unemployed by 8.8%. As expected, the effect is stronger for more recent immigrants, immigrants who moved when they were older, more educated immigrants, immigrants coming from less globalized countries, and first generation immigrants. By controlling for selection into emigration and selection of destination, I show that these results are not sensitive to endogenous migration decisions of those who immigrate. This negative effect of cultural distance is robust to inclusion of an extensive set of control variables and use of various cultural measures. Furthermore, greater cultural distance increases immigrants ’ crime rates, lowers immigrants ’ interest in the host-country's political life and their knowledge of its language, leads to lower trust in political and legal institutions of the host country and worsens health outcomes. The negative effect of cultural distance is increasing over time