The Effect of Ethnic Clustering on Migrant Integration in Germany

45 Pages Posted: 13 Jun 2015

See all articles by Sandra Schaffner

Sandra Schaffner

RWI - Leibniz Institute for Economic Research

Barbara Treude

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University College London

Date Written: December 17, 2014

Abstract

Since ethnic clustering is common in Germany, a better understanding of its effects on the integration of immigrants could be important for integration policies, especially in the light of rising immigration and a skilled worker shortage. Yet, both economic theory and empirical research for other countries cannot give a clear-cut answer to whether clustering is beneficial or detrimental for immigrants’ integration. In this paper, the effect of residential clustering on the labour market outcome of first-generation immigrants in Germany is analysed empirically. It, thus, contributes to the literature by extending it to Germany on which hardly any research has been conducted. For the analysis, two measures for labour market integration are used: the employment probability and wage levels. In order to control for the endogeneity of the location decision, a two-step strategy is used, combining a control function and an instrumental variable (IV) approach. The results suggest a negative enclave effect on both employment and wages, that is even larger when sorting is taken into account.

Keywords: Ethnic enclaves; residential clustering; labour market integration; migrants; wage differentials

JEL Classification: J61, J64, J31, R23

Suggested Citation

Schaffner, Sandra and Treude, Barbara, The Effect of Ethnic Clustering on Migrant Integration in Germany (December 17, 2014). Available at SSRN: https://ssrn.com/abstract=2579732 or http://dx.doi.org/10.2139/ssrn.2579732

Sandra Schaffner (Contact Author)

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

HOME PAGE: http://www.rwi-essen.de/schaffner

Barbara Treude

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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