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Demography

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01-11-2011

Ethnic Enclaves and the Earnings of Immigrants

Authors: Yu Xie, Margaret Gough

Published in: Demography | Issue 4/2011

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Abstract

A large literature in sociology concerns the implications of immigrants’ participation in ethnic enclaves for their economic and social well-being. The “enclave thesis” speculates that immigrants benefit from working in ethnic enclaves. Previous research concerning the effects of enclave participation on immigrants’ economic outcomes has come to mixed conclusions as to whether enclave effects are positive or negative. In this article, we seek to extend and improve upon past work by formulating testable hypotheses based on the enclave thesis and testing them with data from the 2003 New Immigrant Survey (NIS), employing both residence-based and workplace-based measures of the ethnic enclave. We compare the economic outcomes of immigrants working in ethnic enclaves with those of immigrants working in the mainstream economy. Our research yields minimal support for the enclave thesis. Our results further indicate that for some immigrant groups, ethnic enclave participation actually has a negative effect on economic outcomes.

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To proponents of the enclave thesis, the relative benefit from ethnic enclaves may vary by ethnicity (Wilson and Martin 1982).

Fifty additional cases are lost from the analysis under our workplace and combined measures of ethnic enclave.

Employer ZIP code is collected in the NIS, but coverage is less complete than for residential ZIP code. As a specification check, we replicated our analysis, replacing the residential ZIP code–based definition with an employer ZIP code–based definition. Estimates are unstable, but results using the new measure remain unchanged: they do not support the enclave thesis.

Because census tract numbers are unknown for NIS respondents, ZIP code–level contextual variables were constructed using MABLE/Geocorr2k (http://mcdc2.missouri.edu/websas/geocorr2k.html; accessed December 2008), which provides correspondence between census tracts and ZIP codes through the use of allocation factors. Although this correspondence procedure may introduce some measurement error, the potential measurement error is not expected to affect the substantive results of this study.

Thresholds for all ethnic groups are also available from authors upon request. We chose to inflate an odds ratio instead of a percentage because any multiple of an odds ratio is well defined, but a multiple of a percentage may exceed 1. The substantive conclusion does not depend on the choice of an odds-ratio multiple, nor 7.5 as an inflating factor. Alternative thresholds yield similar results, which are available upon request.

We run a specification check using unlogged hourly earnings to address concerns levied against previous research regarding the effect of compressing the earnings distribution by using the log function (Portes and Shafer 2007). The fit of the models, as measured by R ², is generally worse than for the models using log of hourly earnings, and the pattern of results is consistent with those found in the models using log of hourly earnings.

We attempted to estimate a subgroup analysis that is limited to self-employed respondents to address the literature that focuses on entrepreneurship in ethnic enclaves—in particular, the original formulation of the enclave thesis. However, there were too few self-employed respondents in the sample for a comparison by enclave status, most likely because of the recency of immigration for respondents in the sample.

All results reported in this article reflect weighted analyses.

Predicted values throughout this article are calculated using average values for education, and experience for the applicable aggregate category of Asians or Hispanics, combined with other coefficients from the models being discussed.

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Title: Ethnic Enclaves and the Earnings of Immigrants
Authors: Yu Xie
Margaret Gough
Publication date: 01-11-2011
Publisher: Springer US
Published in: Demography / Issue 4/2011
Print ISSN: 0070-3370
Electronic ISSN: 1533-7790
DOI: https://doi.org/10.1007/s13524-011-0058-8

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