Ethnic concentration and language fluency of immigrants

The paper analyses the impact of regional own-ethnic concentration on the language proficiency of immigrants. It solves the endogeneity of immigrants' location choices by exploiting the fact that guest-workers in Germany after WWII were initially placed by firms and labor agencies. We find a robust negative effect of ethnic concentration on immigrants' language ability. Simulation results of a simultaneous location and learning choice model confirm the presence of the effect and show how immigrants with high learning cost select into ethnic enclaves. Under the counterfactual scenario of a regionally equal distribution of immigrants the share of German-speakers increases only modestly.