Getting the First Job: Size and Quality of Ethnic Enclaves and Refugee Labor Market Entry

We analyze the relationship between residence in an ethnic enclave and immigrants' labor market integration with respect to finding a first job in the receiving country. The analysis distinguishes between the size and the quality of the ethnic enclaves, where quality is measured in terms of employment rate among ethnic peers in the same neighborhood. We use longitudinal geo‐coded registry data for two distinct groups of immigrants arriving in the Stockholm metropolitan area to investigate their initial labor market contact. The first group of immigrants moved from the Balkans in the early 1990s following the Yugoslavian war, and the second group arrived from the Middle East following the second Iraq War in 2006. We estimate the probability of finding a first job using probit regressions and complement the analysis with additional duration models. To draw causal inference, we use instrumentation that combines initial neighborhood variables with citywide variation over time. We provide empirical evidence that the employment rate of the respective immigrant group in the vicinity facilitates labor market integration of new immigrants. The influences of the overall employment rate and the share of conationals in the neighborhood tend to be positive, but less robustly so. Our results are consistent with the notion that the qualitative nature of an enclave is at least as important as the sheer number of ethnic peers in helping new immigrants find jobs.