Ethnic enclaves revisited: Effects on earnings of migrant workers in China

Among rural-to-urban migrants, migrant workers from the same origins tend to concentrate in the same workplaces. When this concentration in a workplace is sufficiently dense, we may consider it a native-place enclave. According to extensive literature on US immigrants, enclave participation may improve the economic well-being of immigrants. This study borrows the same reasoning to evaluate whether or not working in a native-place enclave affects earnings of migrant workers in urban China. We pay particular attention to heterogeneity, not only in how migrants who work in an enclave may differ from those who choose to work in the open economy, but also in varying earnings returns to enclave participation across different groups of migrant workers. Using data from a 2010 survey of migrant workers in the Pearl River Delta and the Yangtze River Delta, we match enclave workers and non-enclave workers with the same propensity to work in an enclave and then compare their earnings differences. We find a positive average earnings return to enclave participation, although this effect is smaller than that resulting from a naïve comparison. Moreover, we find that migrants with a high propensity to work in an enclave benefit more from enclave participation than those with a low propensity. Our findings generally support the enclave thesis and its role in internal migration in China.