Working Paper No. 1195

Ethnic Enclaves and Immigrant Self-employment:​ A Neighborhood Analysis of Enclave Size and Quality

Published: December 21, 2017Pages: 29Keywords: Ethnic enclave; Segregation; Immigrant entrepreneurship; Self-employment; Labor market sorting; IntegrationJEL-codes: P25; L26; J15

Ethnic Enclaves and Immigrant Self-employment:​ A Neighborhood Analysis of Enclave Size and Quality Martin Andersson, Johan P Larsson and Özge Öner


We explore the effects of neighborhood-level ethnic enclaves on the propensity of immigrants to use business ownership as a vehicle to transcend from labor market outsiders to insiders. We exploit an exogenously partitioned grid of geocoded 1–by–1 km squares to approximate neighborhoods, and match it with Swedish full-population data from 2011–2012 to study immigrants from the Middle East.

We demonstrate a robust tendency for people to leave non-employment for self-employment if many members of the neighborhood ethnic diaspora are business owners, while we observe weak effects emanating from business ownership in other groups. Net of these effects, the overall scale of the enclave, measured by local concentration of co-ethnic peers, negatively influences the propensity to become self-employed. The results are consistent with the argument that it is not the scale, but the quality of local ethnic enclaves that influence labor market outcomes for immigrants.

Özge Öner

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Martin Andersson

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martin.andersson@bth.se

Interdisciplinary European Studies

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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