Ethnic Enclaves and Immigrant Labour Market Outcomes: Quasi-Experimental Evidence.

This study investigates empirically how residence in ethnic enclaves affects labour market <p> outcomes of refugees. Self-selection into ethnic enclaves in terms of unobservable characteristics <p> is taken into account by exploitation of a Danish spatial dispersal policy which randomly <p> disperses new refugees across locations conditional on six individual-specific characteristics. <p> The results show that refugees with unfavourable unobserved characteristics are found to <p> self-select into ethnic enclaves. Furthermore, taking account of negative self-selection, a relative <p> standard deviation increase in ethnic group size on average increases the employment probability <p> of refugees by 4 percentage points and earnings by 21 percent. I argue that in case of <p> heterogeneous treatment effects, the estimated effects are local average treatment effects