Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2000:21: Ethnic Enclaves and the Economic Success of Immigrants - Evidence from a Natural Experiment

Per-Anders Edin (), Peter Fredriksson () and Olof ├ůslund
Additional contact information
Per-Anders Edin: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Peter Fredriksson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Olof ├ůslund: Department of Economics, Postal: P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: Recent immigrants tend to locate in ethnic "enclaves" within metropolitan areas. The economic consequence of living in such enclaves is still an unresolved issue. We use an immigrant policy initiative in Sweden, when government authorities distributed refugee immigrants across locales in a way that may be considered exogenous. This policy initiative provides a unique natural experiment, which allows us to estimate the causal effect on labor market outcomes of living in enclaves. We find substantive evidence of sorting across locations. When sorting is taken into account, living in enclaves improves labor market outcomes; for instance, the earnings gain associated with a standard deviation increase in ethnic concentration is in the order of four to five percent.

Keywords: Immigration; Enclaves; Labor market outcomes

JEL-codes: J15; J18; R23

37 pages, December 14, 2000

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