Immigrant Ethnic Enclaves: Causes and Consequences

Abstract

This chapter delves into the enduring and expanding presence of immigrant ethnic enclaves in the contemporary world. It examines their distinctive implications for both immigrants and natives within the labor market through a comprehensive survey of the existing literature in the social sciences, with a focus on research in economics. This chapter first introduces the theoretical framework to elucidate the formation and repercussions of these enclaves. Subsequently, empirical evidence is presented, shedding light on the labor market ramifications encompassing immigrants’ earnings, employment outcomes, and the socio-economic assimilation of second-generation immigrants. Furthermore, the chapter explores the influence of natives’ residential decisions when confronted with the emergence of immigrant ethnic enclaves, revealing how these choices may reinforce the enclaves and their effects.

1. Introduction

An ethnic enclave is characterized by a geographically concentrated area where the population density of a particular ethnic group significantly surpasses that of other groups, along with their proportional representation in the broader society [1]. A distinctive category of ethnic enclaves emerges as a result of immigration patterns in countries that receive immigrants (also known as host countries), such as the United States. The formation of these enclaves tends to occur organically, influenced by the location of their port of arrival; examples include Cuban migrants in Florida [2] and Portuguese migrants in New England [3]; subsequently, the challenges in interactions between members and non-members of ethnic groups, mainly due to differences in immigrants’ language, culture, or socio-economic backgrounds, serve to further reinforce the development of these enclaves. Conversely, intentional policies may also lead to a deliberate formation, as host countries strategically settle immigrants from specific countries upon arrival [4, 5], and the same barriers of interaction reinforce these enclaves as well.

Scholars have long been studying the consequences of these immigrant ethnic enclaves on both the immigrants themselves and on the native-born in host countries [6, 7]. In particular, social scientists with an interest in comprehending the socio-economic assimilation processes of immigrants have focused on using ethnic enclaves as an instrument of analysis [8, 9, 10]. To gain a comprehensive understanding of the social and economic repercussions of immigrant ethnic enclaves, this chapter surveys the contemporary literature in social sciences, with a focus on economic research. It examines the causes of ethnic enclaves, seeks to understand the diverse motivations behind the residential segregation of immigrants, and explores the mechanisms driving the formation, persistence, and consequences of these enclaves.

This chapter starts with a discussion of the significance of ethnic enclaves, focusing on the motivations behind the ethnic enclave formation. Following that, an investigation into the various ways by which immigrants contribute to the formation of ethnic enclaves. This chapter then explores the theoretical and empirical connection between ethnic enclaves and the monetary and non-monetary outcomes of immigrants. Additionally, we examine how residing in ethnic enclaves might influence second-generation immigrants. Lastly, this chapter reviews how immigrant enclaves could affect the native-born.

2. Significance of ethnic enclaves for immigrants

There are many reasons why scholars might be interested in understanding how ethnic enclaves could affect immigrants themselves as well as the native-born community in host countries. In the last 50 years, the immigrant population has not only witnessed a substantial rise but has also become more diverse in terms of ethnic groups and the countries they choose as their destinations. While the United States continues to be the largest recipient of immigrants, there has been a noticeable surge in immigrant populations in other European nations like Norway, Sweden, and Germany [11]. Concurrently, while the populations of Latin American and Mexican migrants have somewhat leveled off, host countries have experienced a significant upswing in Muslim migrants, likely attributable to the escalation of refugee numbers prompted by political instability and conflicts [11]. As immigrants typically reside within communities of their peers and establish ethnic enclaves, these notable shifts in immigration patterns not only offer valuable empirical tools for scholars to investigate the reasons and consequences of ethnic enclaves for both immigrants and the native population but also underscore the importance of informing policy discussions related to immigrants. Furthermore, examining how immigrants engage within their ethnic communities and across different ethnic groups helps in understanding effective ways to facilitate immigrant assimilation and foster mutual understanding and appreciation of differences.

In order to tackle these questions, some research has found an increase in ethnic segregation in the United States, such as the Hispanic and Asian populations [12]. In other countries, residential segregation varies depending on geographic areas, ethnic groups, and immigration waves [13, 14, 15]. These varying trends of immigration suggest a rather complex picture of ethnic enclaves’ realities in the world. Therefore, this section starts with theories of ethnic enclaves on immigrants and assimilation.

2.1 Theories of ethnic enclaves formation

After examining historical and empirical evidence, scholars have constructed a framework explaining the development of ethnic enclaves. Essentially, these studies, primarily relying on case studies and interviews, indicate that the establishment of an ethnic enclave through immigration typically necessitates fulfilling three conditions: a significant pre-existing immigrant population, access to sources of capital, and availability of labor sources, with the first prerequisite being the most crucial [16].

First, there are various reasons that could induce an initial significant immigrant population of certain ethnic groups. Examples include approximately 50,000 Jewish immigrants of German origin arriving in Manhattan between 1840 and 1870 due to war, approximately 125,000 Cuban immigrants arriving in Southeast Florida in the 1980s due to political instability in the origin country, and approximately 150,000 Japanese immigrants arriving in the West Coast for economic incentives. Irrespective of the reason for the initial arrival of immigrants, the significance of having a substantial immigrant population from a specific country of origin extends beyond the creation of a strong workforce; it also entails bringing valuable knowledge about operating businesses in the host country [17]. With an understanding of “buying and selling,” ethnic groups can initiate small businesses tailored exclusively to co-ethnic clientele. Over time, as capital accumulates, these enterprises expand and diversify. What distinguishes these businesses and fosters the development of ethnic enclaves is their reliance on a level of informal reciprocity in both intra- and inter-business operations, rooted in a collective solidarity that goes beyond the basic contractual obligations of non-ethnic-specific businesses [18].

For instance, consider a scenario where a Japanese immigrant in California secures a loan to establish or expand their business. There’s an implicit expectation that the recipient will contribute to the rotating credit when feasible. A failure to adhere to this expectation could lead to being cut off from the sources of funding and co-ethnic patronage, which are crucial for future business success.

In addition to accessing ethnic group-specific capital accumulation, the employer-employee relationship in ethnic-specific enterprises transcends a mere contractual bond, resembling a more paternalistic connection. Beyond providing wages, employers often take on a parental role, offering assistance to co-ethnic employees in training, promotion, transitioning to self-employment, and providing support in emergencies [16]. Employees, in turn, may be called upon to assist with the employer’s family matters, such as babysitting or helping with moving. These three crucial conditions—existing host country knowledge, ethnic-specific capital accumulation, and ethnic-specific labor availability, distinctive to the internal dynamics of ethnic businesses—are the driving forces behind the eventual establishment and fortification of ethnic enclaves.

Secondly, enclave businesses tend to be geographically concentrated to cater to specific ethnic groups. This is because they are created in part to facilitate the exchange of information on credit and capital and provide access to co-ethnic labor supplies better suited for ethnic-specific goods, such as food and education [16].

In addition to these conditions within ethnic-specific businesses, the distinctive relationships between these businesses and established native ones also contribute to the reinforcement of ethnic enclaves. First, while ethnic-specific businesses are occasionally engaged as subcontractors in activities like construction or garment production [19], they frequently engage in direct competition with native enterprises. This means that businesses operated by groups such as Japanese, Cuban, or Jewish, for example, prioritize their own business interests rather than complementing native businesses [16]. Consequently, their willingness to assimilate into native economies beyond competition is limited.

Due to these distinctive features of ethnic businesses, ethnic enclaves may emerge from ethnic neighborhoods by fostering a welcoming environment where new immigrants can lead their lives entirely within the community. This is possible not only because they can tap into local labor market opportunities [16] but also because they can enjoy non-monetary benefits such as ethnic cuisine, linguistic convenience, easy access to religious institutions, and entertainment [20]. Once immigrants can live and thrive within the confines of a community without the necessity for cultural assimilation into the native communities of the host country, the ethnic enclaves will become stable and self-reinforcing.

2.2 Theories of immigrant economic assimilation

Assimilation refers to the gradual erosion of ethnic or racial distinctions at the group level. On an individual level, it entails transformative changes for members of a minority, reducing social and economic gaps between them and the broader society. This process enables individuals to effectively integrate and thrive within the mainstream societal framework [21]. Classical assimilation theories originated from the observation of various ethnic groups and neighborhoods, revealing that immigrants initially exhibit characteristics distinct from those of the native-born population in the host country. However, as immigrants spend more time in the country, they progressively align culturally and economically with the native population [22]. Subsequent research, upon observing the varying assimilation patterns of immigrants from diverse backgrounds in the host economy, proposes an alternative assimilation theory. This new perspective acknowledges a multitude of factors influencing immigrants’ assimilation, including discrimination, prejudice, and segregation. Consequently, immigrants from various backgrounds may undergo upward, downward, or unchanged assimilation tendencies over time, leading to segmented assimilation among immigrant groups [23].

It is no surprise that following the segmented assimilation theory, immigrants could economically assimilate at various speeds depending on the availability of ethnic enclaves in the host country and whether they live in ethnic enclaves. On one hand, ethnic enclaves could provide job market advantages that help immigrants economically assimilate into the host country. First, there could be higher returns to ethnic-specific human capital skills such as ethnic language and ethnic-specific cultural knowledge. These skills are more marketable in ethnic enclaves because, for example, fluency in Spanish increases marginal productivity and wages of employees working in businesses in Cuban enclaves as they predominantly cater to Cuban customers. The same linguistic skill, however, would not increase marginal productivity by the same magnitude outside of ethnic enclaves as businesses would be more likely to cater to a wider range of customers [8, 24]. Second, ethnic peers might have better information about job vacancies, the establishment of ethnic businesses, sources of loans, or potential good matches between prospective workers and employers [25, 26]. Lastly, accomplished co-ethnics can also help less skilled enclave members improve their marginal productivity through knowledge and experience sharing [27, 28] and promote better work ethics [29, 30, 31].

On the other hand, many theories arguing immigrants who live in ethnic enclaves might experience a slower economic assimilation. To begin, ethnic enclaves may impede the acquisition of skills in the host country. Immigrants residing in such enclaves tend to have limited interactions with native populations, leading to reduced motivation to acquire essential host country social skills, including language proficiency and knowledge of social norms and laws. This lack of skill acquisition could, in turn, hinder the chances of securing better employment opportunities or higher earnings [32]. Social networks within enclaves might also convey information that is not conducive to success in the labor market. For instance, being surrounded by individuals who speak the same language has been linked to increased welfare usage among those from high welfare-utilizing groups [33], and the uptake of public programs like Medicaid is closely correlated within specific race/ethnicity groups and neighborhoods [34]. Such behaviors could potentially lead to a higher probability of unemployment and lower marginal productivity.

Moreover, historical housing discrimination, as proposed by the spatial mismatch hypothesis [35, 36], may compel minorities into ethnic enclaves, creating additional barriers to their success in the labor market. Studies show that extended and costly commutes to areas with better job prospects significantly hinder inner-city minorities, leading to higher unemployment rates and lower wages. Given that immigrants often settle in urban neighborhoods and are susceptible to this impact, it is unsurprising that immigrants in ethnic enclaves face a greater likelihood of unemployment and lengthier commutes compared to those outside such enclaves [37].

In summary, the theoretical consensus remains inconclusive regarding whether ethnic enclaves contribute to or impede the economic assimilation of immigrants. Crucially, the influence of ethnic enclaves on immigrant assimilation is contingent upon various factors, including the characteristics of the immigrants, the nature of the ethnic enclaves, and the societal perception of the specific ethnic group. Consequently, the necessity of empirical evidence becomes apparent to comprehensively grasp the impact of ethnic enclaves and to formulate informed policies that foster both the economic success of immigrants and social cohesion.

3. Empirical evidence on consequences of ethnic enclaves

In this section, we offer a comprehensive examination of contemporary economic and sociological empirical literature delving into the consequences linked with immigrant ethnic enclaves. These inquiries utilize independently collected data across various countries’ labor market outcomes, encompassing factors like nationality, place of residence, wages, and employment status. Employing diverse empirical methodologies, particularly through econometric regressions, these studies aim to unravel the correlation and causation connections between immigrant ethnic enclaves and the varied outcomes affecting immigrants, their descendants, and native populations.

3.1 Consequences of immigrants

Among the extensively researched aspects of ethnic enclaves, a prominent focus lies in examining how residency in such enclaves influences the labor market outcomes of immigrants. The popularity of this research theme is unsurprising, given the innate tendency of immigrants to settle among those who share similar ethnic characteristics. The significance of investigating the correlation and causation between enclave residency and labor market success is underscored by its pivotal role in shaping not only the individual achievements of immigrants but also in informing public attitudes that, in turn, can influence policy formulations.

3.1.1 Identification challenges

Assessing the impact of ethnic enclaves on immigrants’ labor market outcomes encounters two principal challenges. First, the absence of clearly defined boundaries for ethnic enclaves, coupled with the possibility of immigrants living and working in different regions, complicates the task of delineating these enclaves. In practice, scholars typically adopt one of two defining criteria to explore this impact. The first criterion focuses on immigrants engaged in businesses owned by individuals of the same ethnic background [38]. Alternatively, the second criterion examines the influence on wages and employment patterns for immigrants residing in areas characterized by a high concentration of co-ethnics, as exemplified in [27, 39, 40], among others. Notably, the latter methodology has gained prevalence in contemporary research, primarily due to better data accessibility. Additionally, certain studies posit that the enclave effect is more discernible when enclaves are defined based on the place of residence, as evidenced by the author in [41], lending further credence to this approach.

The second challenge in assessing the labor market impact of ethnic enclaves involves the “sorting” problem. This issue arises because whether certain immigrants reside in ethnic enclaves is influenced by various characteristics of theirs that also play a role in shaping their labor market outcomes. For instance, those with less desirable labor market skills could potentially “sort” into ethnic enclaves due to difficulties integrating into the host society [36, 42]. Conversely, individuals with higher education levels, who are more likely to migrate in response to economic incentives, might be motivated to move out of ethnic enclaves to access a broader range of employment opportunities [43]. As a result, a naïve empirical analysis that uncovers a negative relationship between the size of ethnic enclaves and the average wages of immigrants residing in those enclaves may not establish a causal link. It is, therefore, crucial to consider the complex interplay of factors contributing to immigrants’ decisions to live in ethnic enclaves and how these decisions impact their labor market outcomes.

3.1.2 The causal link between ethnic enclave size and labor market outcomes

One potential method to address the sorting problem is by adopting an instrumental variable approach. Using rainfall of the origin community to instrument the network size, one study [44] finds that Mexican immigrants with larger network sizes in the host country have better labor market outcomes, suggesting a positive network effect. This means that although the average labor market outcomes of these Mexican immigrants residing in enclaves are lower than those who do not reside in enclaves, their outcomes would have become worse should they reside outside of enclaves.

Due to limitations on ideal instrumental variables, an alternative, and perhaps better, approach to addressing the sorting problem may involve adopting a quasi-experiment. In this scenario, immigrants could be randomly distributed across different regions and neighborhoods, with limited choice in the host country. The objective would be to study the net changes in wages and employment between immigrants residing in co-ethnic-dense areas and those who do not have such density in their living environment. This method aims to minimize the impact of self-selection and provide a more robust evaluation of the influence of ethnic enclaves on labor market outcomes.

Over time, numerous Western countries, including Sweden, have implemented refugee placement policies that facilitate quasi-experimental identification. Prior to 1985, refugees arriving in Sweden had the autonomy to choose their settlement neighborhoods, resulting in an uneven spatial distribution and the emergence of ethnic enclaves. However, between 1985 and 1991, the Swedish government, primarily constrained by housing availability, instituted a placement policy. Under this policy, incoming refugees were exogenously assigned to neighborhoods, leading families to randomly reside either inside or outside of enclaves.

Pioneering this quasi-experiment approach, one study leveraged this variation to investigate the impact of ethnic enclaves on immigrants’ labor market outcomes [27]. Their findings validated the hypothesis that, when accounting for self-selection factors, ethnic enclaves contribute to a nearly 13 percent increase in immigrants’ earnings—a figure that further rises with enhanced enclave quality. The analysis of a similar policy in Denmark not only offers further evidence in support of this theory but also reveals that the source of the positive effects lies with ethnic information networks that improve employment through matching and information dissemination [25, 45]. Further support for this mechanism is provided by the author [5], who uses a similar refugee placement policy in the United States to demonstrate that enclaves only improve newcomers’ labor market outcomes when there is an already established network through long-tenured co-ethnics.

Another relevant, perhaps indirect, aspect influencing the economic assimilation of immigrants within the context of ethnic enclave size pertains to intermarriage.¹ The theory of marriage suggests that while marriages within the same ethnicity are considered optimal due to shared characteristics such as language, culture, and religious affiliations—factors conducive to successful unions—intermarriage may occur due to a lack of co-ethnic peers or a desire to seek characteristics not specific to ethnicity. Consequently, there exists a negative relationship between ethnic enclave size and intermarriage [46, 47, 48, 49]. Intermarriage, in turn, can play a role in immigrants’ assimilation, fostering linguistic and cultural assimilation [50] and providing access to enhanced professional networks [51]. Addressing the endogenous marriage sorting through instrumental variable methods reveals that intermarried immigrants tend to experience higher wages [52, 53, 54], improved employment prospects [55], and greater success in entrepreneurial endeavors [56]. Therefore, it is likely that, ceteris paribus, immigrants who reside in ethnic enclaves could face a potentially negative labor market outcome effect due to their lack of ability or motivation to intermarry. Consequently, by exploring the interplay between intermarriage and ethnic enclaves, a more nuanced understanding of the multifaceted effects of ethnic enclaves on immigrants’ labor market outcomes emerges, underscoring the importance of further investigation into different types of ethnic enclaves.

3.1.3 Quality vs. quantity

Recent studies have expanded our understanding of the factors influencing the labor market success of immigrants within ethnic enclaves. It is now recognized that not only the quantity of co-ethnics in these enclaves but also the quality of these individuals play a crucial role. One significant aspect is the average skill level of ethnic enclaves, as demonstrated by research in Sweden [27] and the United States [28]. In Sweden, highly educated immigrant groups experienced greater wage benefits from ethnic segregation, while similar outcomes were observed in the United States when accounting for endogenous ethnic segregation intensity. On the other hand, lower equality ethnic enclaves, measured in education and income, could be detrimental to the immigrants’ labor market success [5].

A recent study delves deeper into the interplay between the quality of ethnic enclaves and the skill levels of individual immigrants in the United States [57]. Utilizing a triple difference model, the study reveals that the overall impact of ethnic segregation depends on the alignment of immigrants’ education levels with the average education levels of their ethnic group. Specifically, highly educated immigrants can offset the adverse effects of segregation on their earnings when surrounded by similarly well-educated co-ethnics. Conversely, for less-educated immigrants, while being isolated to co-ethnic could in general induce a higher average wage, mostly due to network effects, this positive effect could be dampened if the co-ethnics are also largely lower educated. This research underscores that the impact on immigrants’ labor market outcomes is not solely determined by the quality of ethnic enclaves per se. Instead, the most crucial factor is the alignment or misalignment between immigrants’ education levels and the educational composition of the ethnic enclaves in which they reside.

Interestingly, most studies could not find any significant effect of ethnic enclaves on employment prospects of immigrants. The only exception is a UK-based study, which uncovered that residing in close proximity to a concentrated group of employed co-ethnics can enhance immigrants’ job rates [58]. This reinforces the need for a more comprehensive understanding of the multifaceted factors at play in the complex relationship between ethnic enclaves and immigrants’ labor market experiences.

3.2 Consequences of second-generation immigrants

In the study of ethnic enclaves, we often consider how enclave residence might impact a given immigrant’s eventual assimilation. This question becomes even more pivotal when discussing the children of immigrants—second-generation immigrants—who are native-born citizens potentially growing up in an ethnic environment.

Fluency in the host country’s language and culture is a particularly important determinant of second-generation immigrants’ assimilation and one that is profoundly impacted by growing up in an ethnic enclave. A study [59] demonstrates that children of immigrant families that reside within an enclave are less likely to have an English mother tongue, an effect that is pronounced enough to be detected even for the third generation. The enclave functions as its own society in which the origin country’s language and culture serve as the facilitating medium, thus eliminating the necessity of and limiting exposure to the host country’s language. This study, however, also points out that the effects of the enclave on language significantly weaken when parental exogamy is present, as intermarriage introduces the need for the host country’s language at the household level.

These findings regarding language acquisition are confirmed and further strengthened by a number of studies that exploit a quasi-experimental [60] or an instrumental variable [61] identification strategy. One study use an exogenous placement policy of German guest workers to further prove the detriments of high ethnic concentration on immigrant children’s language proficiency while also demonstrating that the mediating factor is the parents’ language proficiency—or the lack thereof [62].

Another noteworthy discovery highlighted in [62] is the correlation between high ethnic concentration and an increased likelihood of immigrant children dropping out of school. This finding aligns with expectations, given that schools attended by second-generation immigrant children growing up in enclaves are often characterized by ethnic segregation and potentially face social and political discrimination. Therefore, educators in the host country frequently lack the necessary resources to adequately support the substantial number of students grappling with language and cultural challenges.

The empirical research indicates that second-generation immigrant students in enclave schools often face difficulties, leading to a higher likelihood of dropping out [62]. Additionally, they consistently attain lower levels of education compared to their counterparts in schools with lower concentrations of ethnic students [63]. This trend becomes more pronounced, especially when the school has a significant proportion of first-generation students [64].

The restricted assimilation in terms of language and culture, coupled with educational outcomes, can potentially yield enduring impacts on intergenerational mobility and labor market performance. Examining linked historical data, research indicates that offspring of immigrants who departed ethnic enclaves tend to outperform counterparts in relevant socio-economic and assimilation metrics [60, 61]. Conversely, another study reveals that while second-generation immigrants from ethnic enclaves exhibit lower levels of educational attainment, their earnings and employment outcomes show no statistically significant effects [63]. This lack of impact is likely attributed to the robust network within the enclave economy mentioned before.

In summary, residing in ethnic enclaves tends to have adverse effects on the linguistic and cultural assimilation of second-generation students, potentially impacting their educational and, subsequently, labor market outcomes. However, it is conceivable that the enclave’s economic activities and network dynamics alleviate these penalties, preventing the children of immigrants from lagging behind in the labor market. Importantly, akin to the considerations for the first generation, the qualitative aspects of a specific ethnic enclave are as pivotal as its quantitative dimensions. Notably, higher levels of average human capital within a particular ethnic enclave positively influence the educational attainment and labor market performance of the second generation, thereby contributing to increased intergenerational mobility [65].

3.3 Consequences of native-born migration and residential segregation

A considerable body of literature has delved into the effects of immigration on the labor market outcomes of native-born individuals,² a topic that falls beyond the purview of this chapter as it does not directly pertain to ethnicity. However, it is noteworthy that immigrants’ establishment of ethnic enclaves has impacted natives through their residential choices, which could, in turn, affect the residential segregation and integration of immigrants.

The spatial assimilation of immigrants extends beyond their individual residential choices. The concentration of the foreign-born population in specific neighborhoods can impact the mobility patterns of the native-born, influencing the development and persistence of ethnic enclaves. In theory, the growth of an ethnic enclave may lead natives to relocate, a phenomenon termed “native flight,” potentially exacerbating segregation and assimilation challenges discussed earlier. This inclination to cluster with co-ethnics, as suggested in [71], may contribute to the formation and continuation of ethnic enclaves. The cultural and linguistic nuclei created by immigrant enclaves may not align with characteristics sought by native-born individuals in their living environments, prompting them to move away from areas with a significant presence of ethnic enclaves.

The decision to relocate from ethnic enclaves might persist beyond considerations of discriminatory factors, as natives could also be driven by economic considerations. Immigrants may be associated with lower average income and education levels, potentially linked to negative neighborhood characteristics such as higher crime rates and lower quality of local services [72]. Consequently, natives may choose to move from ethnic enclaves for reasons unrelated to race or discrimination [73].

Conversely, research also highlights that the influx of immigrants and the expansion of ethnic enclaves can drive up housing demand, leading to increased rents and housing prices in host cities [74, 75]. This economic impact could motivate natives to either remain in or move to ethnic enclaves to capitalize on economic advantages. Alternatively, the rising costs associated with ethnic neighborhoods may prompt some natives to seek more affordable living options elsewhere.

Many empirical studies support the native flight phenomenon. One study employed a geographical diffusion model and an instrumental variable approach in their empirical study [76]. They discovered that an exogenous increase in the immigrant population in a neighborhood led to a significant decrease in the native population, indicative of native flight. This phenomenon was attributed to the lower socio-economic status of the immigrant population and their ethnicity. Examining the quasi-natural experiment of the Swedish state-run placement policy for refugee immigration from 1990 to 2010, researchers also found that natives with high mobility levels tended to move away from areas with concentrated immigrant populations. Socio-economic homogeneity, rather than ethnic homogeneity, was identified as the primary reason for this native flight phenomenon [77]. One other interesting study uses comprehensive data on residential moves within Stockholm municipality from 1990 to 2003, and observed that immigration enclaves acted more as deterrents for Swedes considering moving into these neighborhoods, rather than catalysts for natives already residing in ethnic enclaves to leave [78]. While examining the UK labor market, researchers found that high-earning natives tended to move away from areas with a concentration of lower-educated immigrants [79]. This migration pattern resulted in reduced demand and real estate values within ethnic enclaves. Additionally, analyzing district-level data from 20 large Italian cities, research also revealed that immigration raised housing prices in receiving cities [80]. However, districts with a high concentration of immigrants experienced slower housing price growth compared to districts without such concentration, indicating native flight from immigrant-dense areas. Similar results of lower housing values associated with immigration inflows were also found in the United States [20]. This reduction in real estate values within ethnic enclaves could exacerbate segregation, diminishing the attractiveness of these neighborhoods due to lower investment prospects.

Contrary to these findings, researchers who examined the Spanish data found that, during the migration surge in Spain from 1998 to 2008, established neighborhoods experiencing an increase in the immigrant population saw minor displacement of natives. However, these disruptions were absorbed by flourishing suburban areas, resulting in no noteworthy change in residential segregation [81].

To sum up, immigration inflows and the subsequent formation of ethnic enclaves have been found to cause a certain degree of “native flight,” where native-born either move away or avoid residential areas where immigrants congregate, mostly due to lower socio-economic characteristics of immigration ethnic enclaves. This phenomenon creates further resistance to ethnic integration within local labor markets and could cause slower economic and cultural assimilation of immigrants.

4. Conclusion

In conclusion, the ongoing presence of immigrant ethnic enclaves is a significant area of interest in both academic and policy circles. This chapter provides a thorough overview of the state-of-the-art literature in the social sciences, shedding light on the impact of ethnic enclaves on both immigrants and natives within the labor market. Starting with a theoretical examination, ethnic enclaves emerge as crucial in understanding immigrants’ socio-economic assimilation, serving as both outcomes and catalysts.

Turning to empirical evidence, after accounting for immigrants’ residential sorting behaviors, ethnic enclaves contribute positively to immigrants’ earnings, largely due to informal networks. However, the role of ethnic enclaves in influencing immigrants’ employment prospects lacks substantial empirical support. Moreover, the chapter emphasizes that the relationship between ethnic enclaves and labor market outcomes is nuanced, influenced by the quality of enclave members in terms of education and labor market success.

Examining second-generation immigrants, evidence suggests that living among co-ethnics may negatively impact their educational and linguistic assimilation, potentially reinforcing ethnic segregation. Similar to the effects on immigrants, the quality of ethnic enclaves plays a crucial role in the offspring of immigrants.

Additionally, the chapter discusses how immigrant ethnic enclaves might be further exacerbated due to native flight, acknowledging the potential impact of natives’ residential choices on enclave dynamics.

In summary, this chapter contributes valuable insights into the multifaceted dynamics of immigrant ethnic enclaves, underscoring their relevance in understanding labor market outcomes for immigrants and natives. These findings have implications for informed policymaking and academic research in the field of immigration and integration.

5. Future questions

A potential future research direction concerning ethnic enclaves could involve a deeper exploration of the connection between these enclaves and the employment prospects of immigrants. In contrast to the observable wage effect associated with ethnic enclaves, existing research has generally failed to uncover empirical evidence indicating differential employment prospects for immigrants residing within and outside of ethnic enclaves. The question arises: does the absence of such evidence stem from a perfect offsetting of benefits and costs within the job searching process in ethnic enclaves, or is it that the network effect of ethnic enclaves only comes into play after the job search stage? This question remains unanswered and warrants further investigation.

Additionally, against the backdrop of heightened political discord surrounding immigration and refugee crises arising from war and conflict, it is imperative for governments to forge policies that not only navigate cultural intricacies but also align with economic considerations. Consequently, a promising avenue for future research involves delving into the impact of government policies on ethnic enclaves, encompassing cultural centers and training programs, and their effects on enclaves with diverse characteristics.

Compelling evidence underscores that immigrants in ethnic enclaves reap both monetary and non-monetary benefits, contingent upon the nature and quality of these enclaves. Recognizing the necessity for policies crafted with precision to resonate with specific immigrant groups is crucial. Neglecting this aspect may have adverse consequences on the economic assimilation and social well-being of immigrants, particularly those prioritizing the acquisition of labor market skills without severing their cultural or economic roots.

Conducting a thorough examination of the distinctive features characterizing diverse ethnic enclaves and soliciting input from immigrants regarding potential public policies within these contexts holds the promise of yielding valuable insights. This approach may unveil effective strategies for the meticulous design and implementation of policies that not only acknowledge the diversity inherent in ethnic enclaves but also attend to the distinct needs and aspirations of immigrant communities.

Conflict of interest

The authors declare no conflict of interest.