Ethnic Enclaves and Immigrant Labor Market Outcomes: Quasi‐Experimental Evidence

Neighborhood quality and labor market outcomes: Evidence from quasi-random neighborhood assignment of immigrants

“…A potential explanation for these asymmetric findings is that while employed contacts of non-Western immigrant origin are useful for finding a job in the host-country, employed co-national contacts are useful for finding a job which matches the individual's skills, because only co-nationals know the value of the individual's education obtained in the country of origin. That is, co-national contacts disseminate information which increases the job-worker match quality and thereby the hourly wage rate (for theoretical and empirical evidence on this mechanism, see Damm, 2009, andDustmann, Glitz andSchönberg, 2011).…”

“…The latter result is very interesting. It suggests that the finding of Edin et al (2003) and Damm (2009) However, the size and the quality of the local ethnic enclave are positively correlated because larger ethnic enclaves are more established. Therefore, the positive and significant effect of log percentage co-nationals aged 18-60 living in the neighborhood of residence on the individual's real annual earnings 2-6 years after immigration may ve upward biased due to omission of ethnic enclave quality.…”

“…The quasi-experimental papers on the effect of living in an ethnic enclave on immigrant labor market outcomes by Edin, Fredriksson and Åslund (2003) and Damm (2009) emphasize the importance of having many weak ties. Edin et al (2003) exploit a Swedish Spatial Dispersal Policy on refugees to estimate the earnings effect of the number of co-nationals living in the municipality of residence 8 years after immigration.…”

“…Using the Danish Spatial Dispersal Policy on refugees in place from 1986 until 1998, Damm (2009) finds a positive effect of the number of co-nationals living in the municipality of residence 7 years after immigration on individual real annual earnings, for both low-and highly skilled refugees. As instrument Damm (2009) uses the number of co-nationals assigned together with individual i to municipality j. A likely explanation is that co-ethnic contacts convey valuable information about better-paying jobs.…”

Unemployment of Non-Western Immigrants in the Great Recession

“…Edin, Fredriksson, and Aslund (2003) analyze the labor market position of refugee immigrants in Sweden showing that living in enclaves improves labor market outcomes of less-skilled immigrants compared to immigrants living outside enclaves. Damm (2009) finds that in Denmark, refugees with unfavorable unobserved characteristics self-select into immigrant enclaves. She also finds that living in an enclave is beneficial to immigrant wages.…”