Anticipating the citizenship premium: before and after effects of immigrant naturalisation on employment

Can citizenship improve the economic integration of immigrants, and if so, how? Scholars traditionally understand a citizenship premium in the labour market, besides access to restricted jobs, as the result of a positive signal of naturalisation towards employers. While we do not discard these mechanisms, we argue that explanations should also take into account that migrants anticipate rewards and opportunities of naturalisation by investing in their human capital development. We thus expect to observe improved employment outcomes already before the acquisition of citizenship. We use micro-level register data from Statistics Netherlands from 1999 until 2011 (N?=?94,320) to test this expectation. Results show a one-time boost in the probability of having employment after naturalisation, consistent with the prevalent notion of positive signalling. However, we find that the employment probability of naturalising migrants already develops faster during the years leading up to citizenship acquisition, even when controlling for endogeneity of naturalisation. We conclude that it is not just the positive signal of citizenship that improves employment opportunities, but also migrants’ human capital investment in anticipation of naturalisation.