In this paper, we investigate the effects of ethnic enclaves on the economic prospects of newly arrived immigrants. Using a geo-coded full population longitudinal matched employer-employee data for Stockholm metropolitan region, we create dyads between residential neighborhoods and potential workplace neighborhoods for newly arrived unemployed immigrants from the Balkans and the Middle East, who arrived to Sweden during two distinct time periods following wars.
By estimating a conditional logit model on the first workplace location, we control for unobserved individual heterogeneity, as well as general enclave effects stemming from the residential neighborhood. We find that immigrants are more likely to find their first jobs in locations where many ethnic peers from their neighborhoods are employed. Our analysis provides evidence for causal effects from ethnic networks on reducing labor market frictions associated with information on jobs and job locations.