Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: This study investigates empirically how residence in ethnic enclaves affects labour market

outcomes of refugees. Self-selection into ethnic enclaves in terms of unobservable characteristics

is taken into account by exploitation of a Danish spatial dispersal policy which randomly

disperses new refugees across locations conditional on six individual-specific characteristics.

The results show that refugees with unfavourable unobserved characteristics are found to

self-select into ethnic enclaves. Furthermore, taking account of negative self-selection, a relative

standard deviation increase in ethnic group size on average increases the employment probability

of refugees by 4 percentage points and earnings by 21 percent. I argue that in case of

heterogeneous treatment effects, the estimated effects are local average treatment effects

Keywords: Ethnic Enclaves; Employment; Earnings; LATE

JEL-codes: C35; J15; J64; Z13

54 pages, September 27, 2006

Note: Published as “Ethnic Enclaves and Immigrant Labor Market Outcomes: Quasi-Experimental Evidence”. Journal of Labor Economics 2009, 27(2): 281-314.

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