Ethnic Enclaves and Self-employment among Middle Eastern Immigrants in Sweden – Ethnic Capital or Enclave Size?

Abstract

We employ geocoded data to explore the effects of ethnic enclaves in Swedish cities on the propensity of Middle Eastern immigrants to use business ownership as a vehicle to transcend from labor market outsiders to insiders. We demonstrate a robust tendency for immigrants to leave non-employment for self-employment if many co-ethnic peers in the enclave are business owners, while we observe weak effects emanating from business owners in other groups. Net of these effects, overall enclave size, measured by the local concentration of co-ethnic peers, has a negative influence on the propensity for an outsider to become self-employed.