Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: We investigate if there are positive economic effects for individuals residing in ethnic neighborhoods, in particular if the likelihood of labor market participation among foreign born is affected by residentially aggregating with other people from the same region. We also examine to what extent the income level among foreign born who has a job is affected by the extent to which they congregate in ethnic enclaves. We use Swedish micro-level data for the time period 2007 to 2015 and run a Heckman estimation for the population overall, for immigrants, but also for four distinct immigration groups: those from poor and middle-income countries in Africa or Asia, from Former Yugoslavia, and from the Middle East. We control for personal and neighborhood characteristics, as well as work place characteristics. The results suggest that there may be positive effects from ethnic concentration, but only if the group makes up a significant share of the population in that neighborhood.

Keywords: Labor market participation; foreign born; immigration; clustering effects; income levels

JEL-codes: J15; J31; R23

44 pages, February 18, 2019

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