Economic returns of participation in the enclave and mainstream economy for Chinese and South Asian immigrants in Canada

Abstract

Economic integration of immigrants has been studied from three theoretical perspectives: assimilation theory, social capital theory and immigrant enclave economy thesis. These theoretical perspectives differ on whether immigrants’ ethnic attachments are seen as advancing or limiting their economic interests. The enclave economy thesis suggests that immigrants benefit from enclave participation by making use of common ethnic language and cultural ties to advance their economic interests. Using individual data from the 2006 Census of Canada, this thesis investigates whether Chinese and South Asian immigrants who participate in the enclave economy have better or worse returns compared to their counterparts in the mainstream economy. There are several major general findings. First, Chinese and South Asian immigrants who immigrated to Canada at an older age, those with less human capital, and those who lived in large metropolitan centres are more likely to participate in the enclave economy. Second, the returns for Chinese and South Asian immigrants in the enclave are lower than the returns of their counterparts in the mainstream economy, but the relative enclave earnings disadvantage is smaller for self-employed than for wage workers. Third, the returns to human capital for Chinese and South Asian in the enclave tend to be lower. Fourth, when the interaction terms measuring unequal human capital returns are further controlled, there is a positive effect associated with enclave participation. Such an effect indicates unmeasured positive influences associated with enclave participation after variations in other factors and unequal returns to human capital have been controlled. The positive effect may be understood as results of ethnic solidarity and cultural attachment. At the same time, the study suggests that the enclave economy provides an alternative opportunity to some immigrants, but such an opportunity is not as good as the opportunity in the mainstream economy.