5 Discussion and conclusion

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This study shows that the majority of immigrants and the Canadian born of immigrant parents do not work in ethnically homogeneous settings. In Canada's eight largest metropolitan areas, about 10% of immigrants with non-British or non-French origins work in ethnically homogeneous settings. The level is much higher among Chinese (20%) and Portuguese (18%), and very low among most European immigrant groups. About 5% of Canadian-born minority-group members work in ethnically homogeneous settings. Only Canadian-born Italians and Portuguese have a substantially higher level than the overall average.

The Canadian-born Chinese, South Asians and Filipinos have a very low level of co-ethnic concentration relative to their immigrant counterparts. For these groups, working in an ethnically homogenous environment is likely a transitional stage for the new arrivals that are not well educated and are not proficient in the host-country's language(s). While new immigration continues to replenish their populations, the Canadian born and probably the well-educated, long- term immigrants move into the mainstream labour market. By comparison, immigrant and Canadian-born Italians have similar levels of co-ethnic concentration at the workplace. It seems that for this group the tendency of co-ethnic concentration has been passed on from the immigrants to the second generation.

While the level of ethnic concentration at the workplace narrows substantially from immigrants to the Canadian born among the Chinese, Filipinos and South Asians, there is little difference in the level of residential concentration between immigrants and the Canadian born in these groups. Previous studies have suggested that group differences in residential concentration in Canada mostly reflect variations in the degree of preference to live in proximity to own-group members and the capacity to build ethnic communities (Hou 2006, Myles and Hou 2004). It is possible that the Canadian born and the immigrants have similar preferences to live in ethnically concentrated neighbourhoods because living in such neighbourhoods has little consequence on labour market outcomes (Hou and Picot 2003). However, since ethnically homogeneous work settings are often located in low-paying occupations and industries, constraints in human capital probably play a major role for the higher representation of immigrants in such settings that the Canadian born tend to avoid.

Immigrant workers in ethnically homogeneous settings have a much lower proficiency in English/French than other immigrants who do not work or work with fewer or no co-ethnics. Immigrant workers in such settings also have much lower levels of educational attainment than other immigrant workers. These results suggest that ethnic economies provide an accommodation for immigrants who may otherwise not be able to find work at all, because of their lack of human-capital skills. In ethnically homogeneous settings, these immigrants may also face fewer difficulties with communication and job functions than they would in other settings. These findings are consistent with previous observations about the positive role that ethnic economies can play for new immigrants who encounter difficulties of finding employment in the mainstream labour market (Logan, Alba and Stults 2003; Zhou 2004b). An alternative interpretation, however, is that working in an ethnically homogenous environment could reduce immigrants' incentives to learn the host-country language and to invest in those skills required in the mainstream labour market.

Immigrant men working in ethnically homogeneous settings earn, on average, substantially less (33%) than immigrant workers with few or no co-ethnic co-workers. This earnings gap is primarily attributable to differences in human capital factors and to the fact that ethnically homogeneous settings are over-represented in low-paying occupations and industries. Among immigrant women and the Canadian born, working in ethnically homogeneous settings is not associated with a significant earnings gap.

Immigrant workers in ethnically homogenous settings are less likely to report low levels of life satisfaction than are other immigrant workers. It is possible that interaction with other immigrants who share the same language, cultural and ethnic origins is beneficial to individuals' psychological well-being, although alternative explanations of unobserved heterogeneity and firm-size effects cannot be ruled out, due to data limitations (see discussion in the final paragraph below). Among the Canadian born, there is no consistent association between the level of self- perceived life satisfaction and workplace concentration.

This study highlights the merits of studying co-ethnic concentration at immediate work settings. Most previous studies on ethnic economies have been based on ethnic concentration in large geographic areas or occupational/industrial sectors. However, group over-representation at such aggregate levels may not correspond to ethnic concentration at the workplace. Jewish and Chinese men in Canada, for instance, are often over-represented in high-status occupations— such as health, financial services and information technology—in which the majority of their colleagues are not co-ethnics. Italians, on the other hand, are more concentrated at the firm level than in occupations (Reitz, Calzavara and Dasko 1981). Focusing on co-ethnic concentration at immediate work settings provides a better understanding of the causes and consequences of participation in ethnic economies for individual workers.

Some data limitations of this study have to be noted. The Ethnic Diversity Survey (EDS) has no information on the ethnicity of the business owner or supervisor, which can be useful for gaining insight on how ethnic concentration at the workplace is established . Furthermore, the small sample size does not allow a detailed analysis for each identified minority group by immigrant status and sex. The observed sociodemographic variables in the earnings model may not fully capture the possibility that those who are highly motivated and with higher unobserved abilities are also the ones who have a lower propensity to work in an ethnically homogeneous environment. If such unobserved selectivity could be accounted for, the estimated earnings gap would be even smaller, given that it is likely that immigrants with high unobserved abilities may locate out of ethnic enclaves to a greater extent (Edin, Fredriksson and Åslund 2003). This potential bias, therefore, will not affect the study's conclusion about the insignificant association between earnings and co-ethnic concentration. On the other hand, the possible self-selection of generally satisfied individuals into ethnically homogeneous settings lends the possibility of an overstatement of psychological benefits associated with co-ethnic concentration at the workplace. Furthermore, the EDS did not collect data on firm size. Since ethnic businesses are often small in scale (Nee, Sanders and Sernau 1994; Reitz 1990) and small firms tend to offer lower wages than large firms, if firm size could be controlled for then the remaining earnings gap associated with working in ethnically homogeneous settings would be even smaller.