Immigrants and the market for taxi drivers

Immigrants face many obstacles to labor market integration in developed countries, often clustering in certain lower-skilled occupations. To investigate the role of such occupations, this paper studies how labor market outcomes evolve after gaining access to a canonical immigrant occupation: taxi driving. Comparing individuals who choose to pursue and pass the necessary written examinations for a taxi driver’s license to both those who have not yet done so and those who never take taxi examinations, we find that non-Western immigrants increase their monthly earnings by nearly 50 percent between 1 and 3 years later. Moreover, reliance on social insurance programs drops substantially. Natives experience smaller benefits and appear to use taxi driving to recover from negative labor market shocks. We also find that immigrants remain in taxi driving over time and that recently arrived immigrants reap the largest benefits.