Immigrant Enclave Thesis Reconsidered: Case of Chinese Immigrants in the Enclave and Mainstream Economy in Canada

Since the development of the immigrant enclave thesis, there has been a disagreement regarding whether the immigrant enclave hurts or benefits individual immigrants’ earnings. The controversy mainly arises from the imprecise way by which enclave participation is measured and from the difference in performance between entrepreneurs and workers. This study uses data from the 2006 Census of Canada to examine how Chinese immigrants who participate in the mainstream economy and enclave economy differ in earnings. Using “the language used most often at work” to determine enclave participation, the study finds that actual and net earnings of Chinese immigrants in the enclave are lower than those of their counterparts in the mainstream economy. However, when the interaction between human capital and enclave participation is considered, human capital brings a net negative return to enclave participants, but at the same time, a positive effect associated with enclave participation. The positive effect may be understood as coming from unmeasured ethnic and cultural features of the enclave that provide a cushion to lessen the magnitude of income disadvantages in the enclave. The study suggests that there is evidence to support both sides of the debate: enclave participants have lower net returns, but the enclave provides a cushioning effect in reducing earnings disparities. The study suggests that integration policy towards immigrants may consider immigrant enclaves as providing some support to immigrants to soften some disadvantages, but enclaves do not offer the same opportunities as the mainstream economy.