Let’s stick together: Labor market effects from immigrant neighborhood clustering

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 one’s same native region. We also examine to what extent the income level among foreign-born who have 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 four distinct immigration groups: those from (a) the Middle East; poor and middle-income countries in (b) Africa and (c) Asia; and (d) and those from the former Yugoslavia. We control for personal and neighborhood characteristics as well as workplace characteristics. The results suggest that, in some cases, there may be positive effects from ethnic concentration, but even more from living with first- and second-generation immigrants in general.