Emerging Trends in The Social and Behavioral Sciences

Ethnic Enclaves

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Ethnic Enclaves

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Ethnic Enclaves
STEVEN J. GOLD

Abstract
Ethnic enclaves are geographically delimited regions wherein a community of immigrants characterized by common national or ethnic origins as well as class diversity
owns a significant fraction of local businesses. By pooling business skill and investment capital within an environment of shared solidarity and coethnic employment,
group members are able to successfully compete in the host society’s economy such
that both owners and workers are protected from the economic disadvantages (in the
form of low returns on their investments in human capital) that recent immigrants
generally encounter when seeking jobs in a host society’s labor market. Through
reliance on the ethnic enclave, immigrant populations are able to acquire wealth and
provide their children with education sufficient to enter the middle class of the host
society.
This essay traces the origin and development of the ethnic enclave, discusses the
debates it inspired, and considers its contributions as well as the critiques to which it
has been subject. The essay concludes with suggestions for future research that can
link the ethnic enclave formulation with emergent themes in the study of international migration and ethnic economies.

INTRODUCTION
Ethnic enclaves are geographically delimited regions where a community
of immigrants sharing common national or ethnic origins as well as class
diversity owns a significant fraction of local businesses. By pooling business
skill and investment capital within an environment of coethnic employment,
group members are able to successfully compete in the host economy such
that both owners and workers are protected from the economic disadvantages (in the form of low returns on their investments in human capital) that
recent immigrants generally encounter when seeking jobs in a host society’s
labor market. Through reliance on the ethnic enclave, immigrant populations
are able to acquire wealth and provide their children with education sufficient to enter the middle class of the host society.

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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The enclave model, developed by the sociologist Alejandro Portes and colleagues, was one of the most influential and controversial social science concepts of the late twentieth century (Portes & Bach, 1985). It drew on a wide
range of theory and data to play a major role in challenging status quo ideas
about ethnicity, assimilation, and neoclassical economics in an increasingly
diverse American society. Various elements of the approach were harshly
challenged in scholarly debate. However, its basic contention—that immigrant and ethnic groups are able to marshal inured cultural practices and
self-help activities to achieve upward mobility—has endured. Resonating
with a broad body of scholarship and activism, the ethnic enclave has significantly altered the way a wide range of social and political groups both in the
United States and throughout the world understand international migration.
A RENEWED FOCUS ON IMMIGRANT ENTREPRENEURSHIP
Scholars, journalists, and social activists have long noted the propensity
for immigrant and minority groups to open small businesses as a means of
survival (Light, 1972). Until the 1970s, however, immigrant entrepreneurship was seen as a relatively inconsequential adjustment made by marginal
economic actors in less developed regions, which would be ultimately
outmoded by modernization.
However, since the late 1960s and early 1970s, a series of social, economic
and demographic transformations have occurred—in the United States and
throughout the world—making scholars, politicians, and pundits become
much more concerned with the importance of immigrant solidarity generally,
and immigrant self-employment, in particular.
These factors include the greatly increased number and diversity of international migrants in the United States. Their presence can be attributed to the
Immigration Act of 1965, the resettlement of millions of Cold-War refugees,
and the arrival of millions of undocumented migrants. Second is the demand
for equal treatment for all persons and groups, regardless of their nationality, religion, race/ethnicity and gender. Based in postcolonialism and the US
civil rights movement, and supported by legal cases, international organizations and a variety of social movements, the demand for equal treatment has
catalyzed a move away from assimilationism/Americanization and toward
multiculturalism. This demand for equal treatment involves acknowledging
the validity and utility of minorities’ own cultural practices and resources
rather than endorsing only the social forms of the host society as appropriate
guides for social and economic life.
Finally, a third factor that contributed to the enhanced appraisal of immigrants entrepreneurship has been the inability of industrialized nations to
maintain sufficient levels of employment and economic growth to support

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their citizens. Since the oil shocks of the 1970s, the expansion of global economic competition in the 1980s, and the demise of the of the Soviet Union
in the early 1990s, growing numbers of developed societies have suffered
from social and economic ills, especially capital flight and deindustrialization associated with post-Fordist production, resulting in the loss of millions
of jobs and a decline in the quality of life (Wilson, 1996). These developments have occurred within an environment of economic recession, the rise
of neoliberal ideologies, powerful anti-tax movements and the rejection of the
“old time religion” of Keynesian counter-cyclical spending. Consequently,
governments have been limited in their ability to alleviate such conditions
(Sassen, 2007).
Under such circumstances, immigrant and minorities’ resources and
economic strategies have been shown to create positive outcomes for both
migrant groups and the larger society. As such, they have been celebrated as
solutions to the host society’s economic problems rather than being regarded
as “cultural baggage retained from the old country,” as was often the case
before the 1970s. In fact, since about 2000 the importance of immigrant
entrepreneurship—which had been largely neglected by business experts
until lately—came to be celebrated as a major engine for economic growth
(Hohn, 2012; Saxenian, 2006).
Drawing on these factors, between the 1960s and 1980s, journalists, activists
and scholars demonstrated the social and economic achievements of a wide
variety of immigrant and ethnic groups, transforming their status from hapless outsiders to super-achieving model minorities who, for many, represent
the best in American society (Caplan, Whitmore, & Bui, 1985; Gold, 2009).
Their accomplishments were all the more impressive given the fact that several nationalities arrived in the United States penniless and had to overcome
significant discrimination in order to join the US middle class. Such groups
included Japanese, Jews, Chinese, Irish, Vietnamese, Caribbeans, Koreans,
Chaldeans, Cubans, Finns, and many others.
FROM CULTURAL TO CONTEXTUAL VIEWS OF IMMIGRANT MOBILITY
As part of this movement, scholars, journalists and activists developed new
approaches for understanding the social and contextual forces that shaped
immigrant and ethnic groups’ fates in American society. Before this time, cultural determinism was the dominant explanation used to account for mobility patterns. Ignoring unequal access to resources as well as the affects of
discrimination, the culture of poverty theory asserted that persons associated with “successful” (generally Northern European and Protestant) cultures have an ample aptitude for business and a strong work ethic while less
successful groups (generally non-Caucasian) lacked these characteristics and

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were unable to defer gratification in order to achieve future goals (Banfield,
1974).
Portes (2010, p. 171) describes the flaws associated with the cultural
approach. “Post factum chronicles of the economic success of such groups
make much of their unique value endowment—the unique ‘love of learning’
of the Jews or the Japanese ‘Confucian ethic’ for example. In reality, immigrants from the most varied religio/cultural backgrounds have been able to
develop enclave or enclavelike economic hubs in America.”
As a means of creating an alternative to cultural, racial, and gender-based
explanations for the economic difficulties that low status persons (women,
immigrants, and members of racial and ethnic minority groups) faced in US
society, social scientists developed a variety of theories that could account for
the impacts of inequality and discrimination including the dual labor market
model (Averett, 1968).
In contrast to neoclassical economics that denies the significance of workers’ social characteristics in allocating rewards, observers have noticed that
women, immigrants and minorities often compete for jobs in a sphere separate from that of native-born White men. The former group receives lower
wages, fewer benefits, less security, and worse working conditions than the
latter because of their membership in a lower status social group. The ethnic
enclave model suggests that by cooperating in economic activities that they
control and own, immigrants can protect themselves from the discriminatory
treatment that members of their group normally receive when seeking jobs
in the larger society. As such, participating in the ethnic enclave is a more
rewarding strategy than is joining the social and economic life of the larger
society.
Drawing on and contributing to this interest in finding more convincing and less ethnocentric explanations for the economic achievements of
self-employed immigrant groups, Portes and his colleagues established and
then refined what we now know as the enclave model. The ethnic enclave
was not the only body of work that discussed the positive impacts of ethnic
entrepreneurship, but it was explicitly codified, supported by quantitative
analysis and appeared in highly regarded journals. Accordingly, it functioned as conceptual shorthand for a broader intellectual agenda. A Cuban
exile, Portes was well-positioned to explore and describe the rapid economic
growth of the Cuban community in South Florida that is reflected in this
formulation.
DEFINING FEATURES OF ENCLAVES
Fidel Castro’s revolution and ascendency dislodged a highly skilled population with extensive business skills. Their shared antipathy to the new

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administration unified community members, many of whom already knew
one another before their exit and facilitated their recreation of Cuban social,
cultural, political, and religious institutions in South Florida (Portes, 1987).
Drawing on coethnic ties they acquired start-up capital. (A unique source
was “character loans” secured via exiles employed in US banks who could
vouch for fellow migrants’ business skills and reliability.) In this way,
Cubans rapidly established ownership of numerous businesses. Conationals
of more humble means as well as married women who were anxious to
reestablish middle class standing in the United States provided reliable labor
for coethnic entrepreneurs (Fernández-Kelly & Garcia, 1990).
The enclave further facilitated economic success through horizontal
and vertical integrations (Wilson & Martin, 1982). Horizontal integration
involves ethnic business owners cooperating to choose store locations,
avoid competitive pricing, pool information and engage in collective
buying. Vertical integration occurs when a whole package of business
services—ranging from credit, wholesale goods and maintenance, to
parking, transportation, real estate, manufacturing, and import/export
concessions—are provided by coethnics. Through vertical and horizontal
integrations, ethnic entrepreneurs support each other, strengthen coethnic
ties, share information, avoid cannibalistic competition and generally
contribute to the interlocking business orientation of the entire immigrant
community.
Portes and colleagues emphasize enclave businesses’ geographical concentration and servicing of the larger society (rather than marketing to coethnic
customers) as a means of distinguishing enclaves from the more typical
but less lucrative pattern involving a handful of restaurants, groceries and
coffee shops selling to coethnics that is found within nearly every migrant
population. Finally, setting apart enclaves from patterns of middlemen
entrepreneurship is the fact that the owners of enclave businesses determine
their own economic agenda rather than expanding the market of local elites
by providng their goods and services to minority customers.
CASE STUDIES OF ENCLAVES
Portes and his collaborators engaged in comparative/historical analysis
to demonstrate that Cuban Miami was not the sole example of an ethnic
enclave. In several articles, these scholars showed how similar circumstances
of coethnic collaboration, community-based capital and skill, class diversity,
geographical concentration of businesses, and marketing to the larger
society were associated with the economic achievements of three other
entrepreneurial immigrant communities—New York Jews and California

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Japanese during the early twentieth century, and Los Angeles Koreans after
the 1970s (Portes, 2010; Portes & Manning, 1986).
THE ETHNIC ENCLAVE DEBATE
Following its initial formulation, the concept was criticized, defended and
refined in a series of journal articles, book chapters, and books. Indeed, an
extensive debate about its usefulness and validity occupied scholars for three
decades. The theory’s conceptual basis, definition, utility and broader application have all been subject to intense scrutiny and tested through the analysis of multiple data sets and various methodological approaches (Light,
Sabagh, Bozorgmehr, & Der-Martirosian, 1994; Sanders & Nee, 1987, 1996).
RETURNS TO HUMAN CAPITAL INVESTMENTS FOR WORKERS
Probably the most controversial contention of the enclave formulation has
been its assertion that coethnic employment can provide greater rewards to
the human capital investments of coethnic workers (as well as owners) than
are available in the larger economy.
Critics of the enclave formulation generally accept that immigrant business owners often have greater earnings than coethnics working for others.
However, the assertion that coethnic employees receive greater rewards
has been subject to many empirical challenges. In the broader literature on
international migration, it is almost universally reported that the employees
of immigrant enterprises receive low wages—often reflecting the fact that
immigrant-owned businesses involve poorly paid, labor intensive activities
such as restaurants, service, garments, and construction (Bean & Stevens,
2003; Castles & Miller, 2009; Waldinger, 1996; Waldinger & Bozorgmehr,
1996).
Moreover, immigrants employed in such activities are expected to earn
even less than the native born, as they are disadvantaged in the larger
economy. They do not speak English, have little employment-related
knowledge about or connections with the larger society, and may lack legal
status (Wilson, 1996). Finally, it is well known that the vast majority of all
businesses—about 75% (including those owned by both the native-born and
immigrants)—have no employees (US Census, 2007). Hence, when scholars
evaluate the earnings of an enclave population (i.e., a population made up of
self-employed immigrants of a given nationality and the coethnics that they
employ), they are likely to come up with a figure that vastly overrepresents
owners versus employees. For these reasons, several studies contend that
participation in an enclave is likely to reduce rather than increase the
earnings of workers (Nee & Sanders, 1987; Xie & Gough, 2011).

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For example, in their research on Cubans in Miami and Chinese in
San Francisco, sociologists Victor Nee and Jimy Sanders concluded that
“Contrary to the enclave economy hypothesis, we find that ethnic workers
in the enclave receive comparatively low returns to their human capital
investments” (Nee & Sanders, 1987, p. 771). Similarly in one of the most
recent articles to examine the impact of enclaves on incomes, one based on
data from a 2003–2004 survey of immigrants that included five major Asian
American groups (Chinese, Filipino, Indian, Vietnamese, and Korean) and
seven Latino groups (Mexican, Salvadoran, Columbian, Cuban, Dominican,
Guatemalan, and Peruvian), Xie and Gough (2011) found that “our results
do not support the enclave thesis … preimmigration education was found
to have a smaller effect in enclaves than outside enclaves for Asians as a
whole and also for Peruvians.”
THE LIMITATIONS OF A NARROW DEFINITION?
In addition to the specific questions about immigrant enclaves that have been
explored via statistical analysis, a further set of theoretical and conceptual
critiques have also been mounted. Several authors contend that the enclave
is such a narrow concept that it cannot be applied to more than a handful of
groups, thus limiting its utility.
LEVELS OF COETHNIC COLLABORATION
The ethnic enclave model emphasizes ethnic solidarity as the basis of mutually beneficial economic cooperation, yielding vertical and horizontal integrations among business owners and the maintenance of fair treatment and
cordial relations among coethnic employers and workers.
However, evidence suggests that the high levels of coethnic solidarity and
cooperation that underlie the enclave are relatively uncommon. Instead, a
review of research on various ethnic groups indicates the existence of internal conflicts and a high degree of mutual suspicion—based on class, region,
religion, lifestyle, history, ideology, ethnicity, and other factors—discourages
group-wide cooperation. Many studies conclude that the high levels of trust
and solidarity that underlie economic cooperation tend to exist within intimate subgroups defined by family, common regional origins, and various
shared experiences in education, politics, religion, or the military, and not
at the level of the entire coethnic population (Bodnar, 1985; Dallalfar, 1994;
Gold, 1992).
As a case in point, Light et al. (1994) found that the highly entrepreneurial
Iranian community of greater Los Angeles is made up of four ethnoreligious
subgroups—Armenians, Jews, Baha’is, and Muslims—and that the highest

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levels of cooperation take place within them. Gold found a similar pattern of
subgroup cooperation among Israeli, Vietnamese, and Chinese Vietnamese
business owners in California (Gold, 1994a, 2002).
Because cooperation takes place within subcommunities and not among the
entire population, the potential for coethnic collaboration and the rewards
thereby generated are often less than those described as occurring among
exemplary ethnic enclave groups. As Portes (1987) suggests, the shared experience of flight from Castro provided early Cuban refugees with an especially
high level of ethnic solidarity that fostered economic collaboration. In contrast, other migrant nationalities often reveal lower levels of solidarity and
cooperation.
Coethnic cooperation is vital to the maintenance of good relations among
business owners and workers that encourage profitability, foster investment,
and preclude exploitation. Indeed, the benefits of this sort of collaboration are
well documented in the broader literature on ethnic entrepreneurship (Bailey
& Waldinger, 1991; Light, 1972; Wong, 1998).
At the same time, however, a significant body of research also discusses patterns of conflict that occur among business owners and workers of the same
nationality. It demonstrates that groups with high rates of self-employment
may avoid hiring coethnic workers, precisely because in-group solidarity
would require employers to provide coethnics with better wages and working conditions than those tolerated by outgroup members, thus reducing
owners’ profits as well as their control over employees (Chin, 2005; Gold,
1994b). In addition, because of shared culture and language, employers
fear that coethnic workers will use jobs as a means of building their own
careers—perhaps at the expense of their employers. Many assumed that
coethnic employees would ultimately become competitors.
In the following quote, Yossi, an Israeli contractor described being victimized by coethnic employees, and his resulting decision not to hire Israelis in
the future.
Investigator: Did you ever have friction with your Israeli employees?
Yossi: Well you see, Israelis, they took me as an example. They want to also
become self-employed. So they care too much about the details of how I run
my company, and I don’t like that. I don’t want to say that they are spying, but
they copy me which is perfectly okay, but as long as it helps me.
Investigator: Yeah. They’ll open their own business and then make it harder
for you.
Yossi: Right. But I understand that and I accept that as long as they are not cheating on me that’s fine with me. But if I need to be somewhere else for a while and
a potential customer comes to the work site and asks for a contractor and they

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give their [business] card or leave their number—that’s cheating. I don’t accept
it. So I need to be careful of Israelis and now I hire Mexican workers more.
A dishonest [Israeli] guy like that, I will eventually get rid of him. I will just
throw them from the job. Many times it has happened and I have been hurt. I
would not hire another Israeli. I’d hire a Mexican instead. That’s very unfortunate, but they can’t stop me to hire someone that needs the money.
(Gold, 2002, p. 77).

For their part, workers indicate that coethnic employers provide lower
wages, less pay and fewer benefits than is the case for jobs available in
the larger economy or from other ethnic groups. Accordingly, in many
immigrant populations, employers and workers make efforts to avoid
working with one another (Gold, 1994b, 2002; Kim, 1999; Saloutos, 1964).
Rather than employing coethnics, many studies suggest that undocumented Latinos (largely Mexicans) are favored by small business owners
ranging from native born Whites to a variety of immigrant populations
(Waldinger & Lichter, 2003).
A final factor that prevents numerous migrant groups in the United States
from relying on coethnic employment is the fact that many populations have
relatively low levels of the sort of class diversity that Portes and colleagues
identify as underlying the formation of enclaves.
Migrant groups that have the high levels of education, business experience
and access to capital required to open businesses often lack a significant
working-class population that would be interested in the kind of jobs
immigrant-owned businesses typically create. For example, few Israelis,
Russian-speaking Jews, Koreans, Taiwanese, Iranians, or Indians (all relatively well-educated groups) seek long-term employment as garment
workers, bus boys, assembly workers, or construction laborers. Accordingly,
these immigrant entrepreneurs have little choice but to hire out-group
workers (either the native-born or other immigrants) to fill lower level jobs
in their businesses. On the other hand, some immigrant populations that
seek employment in existing firms lack a sizeable middle class that possesses
the resources required to open businesses. Consequently, they must secure
jobs in companies owned by other ethnic and nationality groups (Delgado,
1993; Hondagneu-Sotelo, 1994; Waters, 1999; Wilson, 1996).
In sum, many of the central tenets of the enclave model assume the existence of very positive and wide-ranging forms of solidarity, social capital and
collaboration within immigrant communities that produce economic benefits. However, an inclusive review of literature about immigrant populations
indicates that these fortuitous conditions are rather rare.

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GEOGRAPHICAL CONCENTRATION
Another series of questions about the ethnic enclave formulation concern
its emphasis on geographical concentration. Before the late twentieth
century, scholars of immigration emphasized geographical concentration
as they examined topics such as residential segregation, the influence of
immigrant elites, urban villages, ethnic succession, employment patterns,
and intergroup conflict. Indeed, many of the classic studies of immigrant
communities concerned concentrated populations such as Little Italies,
Chinatowns, the Lower East Side, Poletowns, Bronzeville, and barrios,
such that geographic concentration became synonymous with immigrant
and ethnic communities in American society (Bodnar, 1985; Lyman, 1974;
Kornblum, 1974; Massey & Denton, 1993).
However, recent research on international migration places far less
emphasis on geographic concentration (Gieryn, 2000). Recent literature
suggests that because of real estate costs, poor quality schools, public safety,
availability of jobs and other factors, migrants increasingly settle in suburban
or exurban areas rather than in concentrated and ethnically defined urban
neighborhoods (Iceland, 2009; Massey, 2010; Zhou, Tseng, & Kim, 2008).
Skilled and professional immigrants often live close to where they work and
travel to ethnic business districts (where relatively few coethnic reside) only
on weekends. Such is the case for recently formed “ethnoburbs” (ethnic
suburbs) such as Koreatowns, Little Indias, Japantowns, Little Saigons, and
Chinatowns in several US and Canadian cities (Maira, 2002; Min, 2008;
Zhou, 2008).
Another body of research that challenges the importance of geographic
concentration among migrants is transnationalism (Basch, Glick Schiller,
& Blanc-Szanton, 1994; Faist, 2000). It argues that because of easy and
inexpensive access to communications and transportation technology,
migrants’ high levels of language and cultural skills and access to legal
status in multiple nations, immigrant entrepreneurs can maintain activities
in multiple settings, including those far from where they reside (Nonini &
Ong, 1997). For example, social and economic processes associated with
Silicon Valley bring together capital, entrepreneurs, workers, production
facilities, subcontractors and consumer markets located in multiple nations,
regions, and continents in order to produce products and generate profits
(Sassen, 2007; Saxenian, 2007; Senor & Singer, 2009).
Such findings about migrants’ increased mobility and lack of geographical confinement suggest that the enclave theory’s requirement that
entrepreneurs and workers share a common location may no longer hold,
and prevents the concept from addressing some of the most compelling
instances of contemporary immigrant entrepreneurship.

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A case in point involves the recent domination of the low-cost motel industry in the United States by Gujaratis. Members of this Indian ethnic group
own two million rooms and 100 billion dollars worth of property—yielding
what may be the largest ethnic enterprise in US history (Dhingra, 2012).
Because most live in their motels—which are located alongside highways
through the country—they lack geographical concentration. In short, the
enclave model’s continued reliance on geographical concentration even
as scholars of migration have increasingly moved away from a focus on
locality for understanding immigrant life, may limit the concept’s enduring
relevance.
Scholars who feel that the ethnic enclave formulation is too narrow have
suggested that the more inclusive concept of the ethnic economy—selfemployed members of a given group as well as their coethnic employees—
should be used instead (Light et al., 1994, p. 66). This would allow the
analysis of a wide range of economic activities among numerous groups and
include both workers and owners in a manner not amenable to the more
rigid and limiting definition of the ethnic enclave (Bean & Stevens, 2003;
Light et al., 1994; Logan, Alba, & McNulty, 1994).
THE ETHNIC ENCLAVE AND SOCIAL POLICY
Stories about disadvantaged minority groups making it into the US middle
class through self-employment are inspiring. The achievements of Cubans,
Jews, Japanese Americans, and Koreans are indeed impressive and speak to
these groups’ entrepreneurial achievements and ability to rise above the substantial obstacles of poverty and discrimination to achieve rapid and near
complete entry into the upper middle class.
However, as we have seen, the number of migrant groups that have created
viable enclaves is limited. Systematic research on self-employment suggests
that small businesses are subject to high rates of failure, and can be established only with substantial investments of effort, knowledge and capital.
In fact, economist Timothy Bates contends that given the amount of human
capital required, immigrant businesses often provide a poor (rather than generous) return on their owners’ investments of human and financial capital.
“The college graduate running a retail store, quite simply, is underemployment” (Bates, 1997, p. 259; Light & Bonacich, 1988).
The authors of the enclave formulation do not prescribe entrepreneurship
as a cure-all for economic difficulties. However, a number of scholars and
policy makers cite research praising ethnic entrepreneurship to support their
endorsement of market-based solution for social and economic problems.
Given the sizeable risks of failure associated with small enterprises, it may
be unwise to devote too much attention to self-employment as the way out

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of economic malaise. This is especially the case for those lacking in financial and human capital who are especially likely to fail (Fairlie & Rabb, 2008;
Gold, 2010).
During the past decade, US census data indicate that self-employed immigrants, minorities and women have received very poor earnings from their
enterprises (Bergman & Tolbert, 2005). Because of the limited rewards available to most entrepreneurs in stagnant or declining economies, world-class
immigrant entrepreneurs of the sort that created Silicon Valley have shown
little interest in the United States during the great recession. This pattern has
been decried by business journalists who observed their shrinking entry into
the United States precisely at a time when the economic growth that they
were hoped to generate was sorely needed (Hohn, 2012). As a case in point,
a Washington Post article questioned whether “the period of unprecedented
expansion of immigrant-led entrepreneurship that characterized the 1980s
and 1990s has come to a close” (Harrison, 2012).
For all these reasons, the enclave model’s celebration of immigrant businesses as a viable solution to problems of economic growth, job creation
and social and economic inequality may be excessive. While immigrant businesses do have the potential to generate benefits for coethnic communities
and the larger society, they create relatively few well-paid jobs, and like all
small businesses, are subject to high rates of failure, especially in depressed
regions and during recessionary periods.
Finally, as Portes notes, the life span of the enclave is fairly short, generally
limited to a single generation because immigrant entrepreneurs encourage
their children to obtain a college education and leave the enclave in favor of
professional careers (Gold, Light, & Johnston, 2006; Goldscheider & Kobrin,
1980). For this reason, Pyong Gap Min (2008) refers to the high rates of business ownership observed among particular migrant groups as serial middleman entrepreneurship. Current owners are expected to sell off their businesses in fairly short order to more recently arrived populations.
THE CONTRIBUTIONS OF THE ETHNIC ENCLAVE FORMULATION
Despite these critiques, the enclave formulation and associated literature
have transformed popular understandings of ethnicity and self-employment
in contemporary society. Since the concept’s formulation, the academic
community, policy makers and the general public have increasingly
acknowledged the benefits of immigrant and ethnic communities’ self-help
strategies, and the utility of migrants’ own cultural forms in improving
group members’ lives as well as addressing social and economic problems
faced by the larger society.

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Drawing from the findings of this scholarship, a wide range of scholars
and policy makers have engaged in extensive research and become much
more aware of the potential benefits—economic and social—associated with
immigrant and ethnic businesses. The findings thereof have been incorporated into a variety of local, state, and federal programs and philanthropic
projects such as business development initiatives, enterprise and empowerment zones, and microloan programs, which seek to facilitate the growth
of immigrant and minority business for community development (Bates,
1997; Gold, 2010; Light & Gold, 2000). Nonprofit agencies, universities, and
government officials have come to regard immigrant entrepreneurship as
a viable, desirable and low cost source of jobs, income and community
revitalization (Arab American News, 2012; Gold, 2009; Woodward, 1997).
While scholars continue to disagree about the extent to which immigrantowned businesses can solve major economic problems, and argue about the
potential ability of a wide range of nationality and ethnic groups to replicate
the optimal combination of resources, opportunities and contexts associated
with the exemplars of enclave populations such as Cubans, Jews, Koreans,
and Japanese that define the concept, the potential benefits derived from
immigrant and ethnic business remain persuasive and are likely to yield
additional social and economic dividends in the future. For these reasons,
the ethnic enclave has proven to be a useful and productive catalyst for
social research and policy making.
FUTURE RESEARCH
Future research on the ethnic enclave is likely to focus on aspects of the formulation that have been subject to critique. These include revising the concept to determine if and how noncoethnic laborers, subcontractors and the
other economic actors could be incorporated into enclaves such that the benefits could be extended beyond a single nationality.
Another topic of potential refinement involves the role of geographical concentration. Given the increasingly transnational lives of ethnic
entrepreneurs, we would like to know if forms of regional or even global
collaboration are capable of producing the same kinds of economic benefits
associated with geographically concentrated coethnic businesses. A third
area for future study concerns the life span of enclaves. Can the benefits of
collaborative immigrant entrepreneurship be extended to last longer than
one generation?
Finally, we note that each of the case studies of enclaves was located in
the United States. Given that immigrant and ethnic entrepreneurship is a
global phenomenon, it might be productive to determine if ethnic enclaves
can be found beyond the unique economic and ethnic contexts of the United

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States. Research on this question might begin with an examination of highly
entrepreneurial migrant populations in other national settings, such as Chinese in Southeast Asia, Indians in East Africa, or South Asians in the Emirates.
REFERENCES
Arab American News (2012). Snyder praises immigrants in State of the State
address. Retrieved from http://www.arabamericannews.com/news/index.php?
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Averett, R. T. (1968). The dual economy. New York, NY: WW Norton.
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Fernández-Kelly, M. P., & Garcia, A. M. (1990). Power surrendered, power restored:
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Portes, A., & Bach, R. (1985). Latin journey: Cuban and Mexican immigrants in the United
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Sanders, J. M., & Nee, V. (1987). Limits of ethnic solidarity in the ethnic enclave economy. American Sociological Review, 52, 745–767.
Sanders, J. M., & Nee, V. (1996). Social capital, human capital and immigrant
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Waldinger, R. (1996). Still the promised city? African-Americans and new immigrants in
postindustrial New York. Cambridge, MA: Harvard University Press.
Waldinger, R., & Bozorgmehr, M. (Eds.) (1996). Ethnic Los Angeles. New York, NY:
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Waldinger, R., & Lichter, M. I. (2003). How the other half works: Immigration and the
social organization of labor. Berkeley: University of California Press.
Waters, M. (1999). Black Identities. New York and Cambridge: Russell Sage and Harvard University Press.

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17

Wilson, W. J. (1996). When work disappears: The world of the new urban poor. New York,
NY: Knopf.
Wilson, K., & Martin, W. A. (1982). Ethnic enclaves: A comparison of the Cuban and
Black economies in Miami. American Journal of Sociology, 88, 135–160.
Wong, B. (1998). Ethnicity and entrepreneurship: The new Chinese immigrants in the San
Francisco Bay Area. Boston, MA: Allyn and Bacon.
Woodward, M. D. (1997). Black entrepreneurs in America: Stories of struggle and success.
New Brunswick, NJ: Rutgers University Press.
Xie, Y. & Gough, M. (2011). Ethnic enclaves and the earnings of immigrants. Demography, On Line August.
Zhou, M., Tseng, Y. F., & Kim, R. (2008). Rethinking residential assimilation through
the case of Chinese ethnoburbs in the San Gabriel Valley, California. Amerasia Journal, 34(3), 55–83.

FURTHER READING
Fairlie, R., & Robb, A. M. (2008). Race and entrepreneurial success: Black-, Asian-, and
White-owned businesses in the United States. Cambridge, MA: MIT Press.
Light, I. (1972). Ethnic enterprise in America: Business and welfare among Chinese, Japanese
and Blacks. Berkeley: University of California Press.
Light, I., & Gold, S. J. (2000). Ethnic economies. San Diego, CA: Academic Press.
Portes, A. (2010). Economic sociology: A systematic inquiry. Princeton, NJ: Princeton
University Press.
Portes, A., & Bach, R. (1985). Latin journey: Cuban and Mexican immigrants in the United
States. Berkeley: University of California Press.
Sanders, J. M., & Nee, V. (1987). Limits of ethnic solidarity in the ethnic enclave economy. American Sociological Review, 52, 745–767.

STEVEN J. GOLD SHORT BIOGRAPHY
Steven J. Gold is Professor and Associate Chair in the Department of
Sociology at Michigan State University. His interests include international
migration, ethnic economies, qualitative methods, and visual sociology. The
past chair of the International Migration Section of the American Sociological Association, Gold is the author, coauthor, or coeditor of seven books.
Together with Rubén G. Rumbaut, he is the editor of The New Americans,
a scholarly book series of over 70 volumes from LFB Publishers. Gold
received the Charles Horton Cooley Award for Distinguished Scholarship
in Sociology from the Michigan Sociology Association in 2007.
RELATED ESSAYS
Globalization Backlash (Sociology), Mabel Berezin
Sibling Relationships and Development (Psychology), Nicole Campione-Barr
and Sarah Killoren

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

Globalization: Consequences for Work and Employment in Advanced
Capitalist Societies (Sociology), Tony Elger
Global Income Inequality (Sociology), Glenn Firebaugh
Migrant Networks (Sociology), Filiz Garip and Asad L. Asad
Group Identity and Political Cohesion (Political Science), Leonie Huddy
Immigration and the Changing Status of Asian Americans (Sociology),
Jennifer Lee
Immigrant Sociocultural Adaptation, Identification, and Belonging (Sociology), Sarah J. Mahler
Visualizing Globalization (Sociology), Matthew C. Mahutga and Robert
Nash-Parker
Immigrant Health Paradox (Sociology), Kyriakos S. Markides and Sunshine
Rote
Politics of Immigration Policy (Political Science), Jeannette Money
Cultural Conflict (Sociology), Ian Mullins
Culture and Globalization (Sociology), Frederick F. Wherry



Ethnic Enclaves
STEVEN J. GOLD

Abstract
Ethnic enclaves are geographically delimited regions wherein a community of immigrants characterized by common national or ethnic origins as well as class diversity
owns a significant fraction of local businesses. By pooling business skill and investment capital within an environment of shared solidarity and coethnic employment,
group members are able to successfully compete in the host society’s economy such
that both owners and workers are protected from the economic disadvantages (in the
form of low returns on their investments in human capital) that recent immigrants
generally encounter when seeking jobs in a host society’s labor market. Through
reliance on the ethnic enclave, immigrant populations are able to acquire wealth and
provide their children with education sufficient to enter the middle class of the host
society.
This essay traces the origin and development of the ethnic enclave, discusses the
debates it inspired, and considers its contributions as well as the critiques to which it
has been subject. The essay concludes with suggestions for future research that can
link the ethnic enclave formulation with emergent themes in the study of international migration and ethnic economies.

INTRODUCTION
Ethnic enclaves are geographically delimited regions where a community
of immigrants sharing common national or ethnic origins as well as class
diversity owns a significant fraction of local businesses. By pooling business
skill and investment capital within an environment of coethnic employment,
group members are able to successfully compete in the host economy such
that both owners and workers are protected from the economic disadvantages (in the form of low returns on their investments in human capital) that
recent immigrants generally encounter when seeking jobs in a host society’s
labor market. Through reliance on the ethnic enclave, immigrant populations
are able to acquire wealth and provide their children with education sufficient to enter the middle class of the host society.

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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The enclave model, developed by the sociologist Alejandro Portes and colleagues, was one of the most influential and controversial social science concepts of the late twentieth century (Portes & Bach, 1985). It drew on a wide
range of theory and data to play a major role in challenging status quo ideas
about ethnicity, assimilation, and neoclassical economics in an increasingly
diverse American society. Various elements of the approach were harshly
challenged in scholarly debate. However, its basic contention—that immigrant and ethnic groups are able to marshal inured cultural practices and
self-help activities to achieve upward mobility—has endured. Resonating
with a broad body of scholarship and activism, the ethnic enclave has significantly altered the way a wide range of social and political groups both in the
United States and throughout the world understand international migration.
A RENEWED FOCUS ON IMMIGRANT ENTREPRENEURSHIP
Scholars, journalists, and social activists have long noted the propensity
for immigrant and minority groups to open small businesses as a means of
survival (Light, 1972). Until the 1970s, however, immigrant entrepreneurship was seen as a relatively inconsequential adjustment made by marginal
economic actors in less developed regions, which would be ultimately
outmoded by modernization.
However, since the late 1960s and early 1970s, a series of social, economic
and demographic transformations have occurred—in the United States and
throughout the world—making scholars, politicians, and pundits become
much more concerned with the importance of immigrant solidarity generally,
and immigrant self-employment, in particular.
These factors include the greatly increased number and diversity of international migrants in the United States. Their presence can be attributed to the
Immigration Act of 1965, the resettlement of millions of Cold-War refugees,
and the arrival of millions of undocumented migrants. Second is the demand
for equal treatment for all persons and groups, regardless of their nationality, religion, race/ethnicity and gender. Based in postcolonialism and the US
civil rights movement, and supported by legal cases, international organizations and a variety of social movements, the demand for equal treatment has
catalyzed a move away from assimilationism/Americanization and toward
multiculturalism. This demand for equal treatment involves acknowledging
the validity and utility of minorities’ own cultural practices and resources
rather than endorsing only the social forms of the host society as appropriate
guides for social and economic life.
Finally, a third factor that contributed to the enhanced appraisal of immigrants entrepreneurship has been the inability of industrialized nations to
maintain sufficient levels of employment and economic growth to support

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their citizens. Since the oil shocks of the 1970s, the expansion of global economic competition in the 1980s, and the demise of the of the Soviet Union
in the early 1990s, growing numbers of developed societies have suffered
from social and economic ills, especially capital flight and deindustrialization associated with post-Fordist production, resulting in the loss of millions
of jobs and a decline in the quality of life (Wilson, 1996). These developments have occurred within an environment of economic recession, the rise
of neoliberal ideologies, powerful anti-tax movements and the rejection of the
“old time religion” of Keynesian counter-cyclical spending. Consequently,
governments have been limited in their ability to alleviate such conditions
(Sassen, 2007).
Under such circumstances, immigrant and minorities’ resources and
economic strategies have been shown to create positive outcomes for both
migrant groups and the larger society. As such, they have been celebrated as
solutions to the host society’s economic problems rather than being regarded
as “cultural baggage retained from the old country,” as was often the case
before the 1970s. In fact, since about 2000 the importance of immigrant
entrepreneurship—which had been largely neglected by business experts
until lately—came to be celebrated as a major engine for economic growth
(Hohn, 2012; Saxenian, 2006).
Drawing on these factors, between the 1960s and 1980s, journalists, activists
and scholars demonstrated the social and economic achievements of a wide
variety of immigrant and ethnic groups, transforming their status from hapless outsiders to super-achieving model minorities who, for many, represent
the best in American society (Caplan, Whitmore, & Bui, 1985; Gold, 2009).
Their accomplishments were all the more impressive given the fact that several nationalities arrived in the United States penniless and had to overcome
significant discrimination in order to join the US middle class. Such groups
included Japanese, Jews, Chinese, Irish, Vietnamese, Caribbeans, Koreans,
Chaldeans, Cubans, Finns, and many others.
FROM CULTURAL TO CONTEXTUAL VIEWS OF IMMIGRANT MOBILITY
As part of this movement, scholars, journalists and activists developed new
approaches for understanding the social and contextual forces that shaped
immigrant and ethnic groups’ fates in American society. Before this time, cultural determinism was the dominant explanation used to account for mobility patterns. Ignoring unequal access to resources as well as the affects of
discrimination, the culture of poverty theory asserted that persons associated with “successful” (generally Northern European and Protestant) cultures have an ample aptitude for business and a strong work ethic while less
successful groups (generally non-Caucasian) lacked these characteristics and

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

were unable to defer gratification in order to achieve future goals (Banfield,
1974).
Portes (2010, p. 171) describes the flaws associated with the cultural
approach. “Post factum chronicles of the economic success of such groups
make much of their unique value endowment—the unique ‘love of learning’
of the Jews or the Japanese ‘Confucian ethic’ for example. In reality, immigrants from the most varied religio/cultural backgrounds have been able to
develop enclave or enclavelike economic hubs in America.”
As a means of creating an alternative to cultural, racial, and gender-based
explanations for the economic difficulties that low status persons (women,
immigrants, and members of racial and ethnic minority groups) faced in US
society, social scientists developed a variety of theories that could account for
the impacts of inequality and discrimination including the dual labor market
model (Averett, 1968).
In contrast to neoclassical economics that denies the significance of workers’ social characteristics in allocating rewards, observers have noticed that
women, immigrants and minorities often compete for jobs in a sphere separate from that of native-born White men. The former group receives lower
wages, fewer benefits, less security, and worse working conditions than the
latter because of their membership in a lower status social group. The ethnic
enclave model suggests that by cooperating in economic activities that they
control and own, immigrants can protect themselves from the discriminatory
treatment that members of their group normally receive when seeking jobs
in the larger society. As such, participating in the ethnic enclave is a more
rewarding strategy than is joining the social and economic life of the larger
society.
Drawing on and contributing to this interest in finding more convincing and less ethnocentric explanations for the economic achievements of
self-employed immigrant groups, Portes and his colleagues established and
then refined what we now know as the enclave model. The ethnic enclave
was not the only body of work that discussed the positive impacts of ethnic
entrepreneurship, but it was explicitly codified, supported by quantitative
analysis and appeared in highly regarded journals. Accordingly, it functioned as conceptual shorthand for a broader intellectual agenda. A Cuban
exile, Portes was well-positioned to explore and describe the rapid economic
growth of the Cuban community in South Florida that is reflected in this
formulation.
DEFINING FEATURES OF ENCLAVES
Fidel Castro’s revolution and ascendency dislodged a highly skilled population with extensive business skills. Their shared antipathy to the new

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5

administration unified community members, many of whom already knew
one another before their exit and facilitated their recreation of Cuban social,
cultural, political, and religious institutions in South Florida (Portes, 1987).
Drawing on coethnic ties they acquired start-up capital. (A unique source
was “character loans” secured via exiles employed in US banks who could
vouch for fellow migrants’ business skills and reliability.) In this way,
Cubans rapidly established ownership of numerous businesses. Conationals
of more humble means as well as married women who were anxious to
reestablish middle class standing in the United States provided reliable labor
for coethnic entrepreneurs (Fernández-Kelly & Garcia, 1990).
The enclave further facilitated economic success through horizontal
and vertical integrations (Wilson & Martin, 1982). Horizontal integration
involves ethnic business owners cooperating to choose store locations,
avoid competitive pricing, pool information and engage in collective
buying. Vertical integration occurs when a whole package of business
services—ranging from credit, wholesale goods and maintenance, to
parking, transportation, real estate, manufacturing, and import/export
concessions—are provided by coethnics. Through vertical and horizontal
integrations, ethnic entrepreneurs support each other, strengthen coethnic
ties, share information, avoid cannibalistic competition and generally
contribute to the interlocking business orientation of the entire immigrant
community.
Portes and colleagues emphasize enclave businesses’ geographical concentration and servicing of the larger society (rather than marketing to coethnic
customers) as a means of distinguishing enclaves from the more typical
but less lucrative pattern involving a handful of restaurants, groceries and
coffee shops selling to coethnics that is found within nearly every migrant
population. Finally, setting apart enclaves from patterns of middlemen
entrepreneurship is the fact that the owners of enclave businesses determine
their own economic agenda rather than expanding the market of local elites
by providng their goods and services to minority customers.
CASE STUDIES OF ENCLAVES
Portes and his collaborators engaged in comparative/historical analysis
to demonstrate that Cuban Miami was not the sole example of an ethnic
enclave. In several articles, these scholars showed how similar circumstances
of coethnic collaboration, community-based capital and skill, class diversity,
geographical concentration of businesses, and marketing to the larger
society were associated with the economic achievements of three other
entrepreneurial immigrant communities—New York Jews and California

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

Japanese during the early twentieth century, and Los Angeles Koreans after
the 1970s (Portes, 2010; Portes & Manning, 1986).
THE ETHNIC ENCLAVE DEBATE
Following its initial formulation, the concept was criticized, defended and
refined in a series of journal articles, book chapters, and books. Indeed, an
extensive debate about its usefulness and validity occupied scholars for three
decades. The theory’s conceptual basis, definition, utility and broader application have all been subject to intense scrutiny and tested through the analysis of multiple data sets and various methodological approaches (Light,
Sabagh, Bozorgmehr, & Der-Martirosian, 1994; Sanders & Nee, 1987, 1996).
RETURNS TO HUMAN CAPITAL INVESTMENTS FOR WORKERS
Probably the most controversial contention of the enclave formulation has
been its assertion that coethnic employment can provide greater rewards to
the human capital investments of coethnic workers (as well as owners) than
are available in the larger economy.
Critics of the enclave formulation generally accept that immigrant business owners often have greater earnings than coethnics working for others.
However, the assertion that coethnic employees receive greater rewards
has been subject to many empirical challenges. In the broader literature on
international migration, it is almost universally reported that the employees
of immigrant enterprises receive low wages—often reflecting the fact that
immigrant-owned businesses involve poorly paid, labor intensive activities
such as restaurants, service, garments, and construction (Bean & Stevens,
2003; Castles & Miller, 2009; Waldinger, 1996; Waldinger & Bozorgmehr,
1996).
Moreover, immigrants employed in such activities are expected to earn
even less than the native born, as they are disadvantaged in the larger
economy. They do not speak English, have little employment-related
knowledge about or connections with the larger society, and may lack legal
status (Wilson, 1996). Finally, it is well known that the vast majority of all
businesses—about 75% (including those owned by both the native-born and
immigrants)—have no employees (US Census, 2007). Hence, when scholars
evaluate the earnings of an enclave population (i.e., a population made up of
self-employed immigrants of a given nationality and the coethnics that they
employ), they are likely to come up with a figure that vastly overrepresents
owners versus employees. For these reasons, several studies contend that
participation in an enclave is likely to reduce rather than increase the
earnings of workers (Nee & Sanders, 1987; Xie & Gough, 2011).

Ethnic Enclaves

7

For example, in their research on Cubans in Miami and Chinese in
San Francisco, sociologists Victor Nee and Jimy Sanders concluded that
“Contrary to the enclave economy hypothesis, we find that ethnic workers
in the enclave receive comparatively low returns to their human capital
investments” (Nee & Sanders, 1987, p. 771). Similarly in one of the most
recent articles to examine the impact of enclaves on incomes, one based on
data from a 2003–2004 survey of immigrants that included five major Asian
American groups (Chinese, Filipino, Indian, Vietnamese, and Korean) and
seven Latino groups (Mexican, Salvadoran, Columbian, Cuban, Dominican,
Guatemalan, and Peruvian), Xie and Gough (2011) found that “our results
do not support the enclave thesis … preimmigration education was found
to have a smaller effect in enclaves than outside enclaves for Asians as a
whole and also for Peruvians.”
THE LIMITATIONS OF A NARROW DEFINITION?
In addition to the specific questions about immigrant enclaves that have been
explored via statistical analysis, a further set of theoretical and conceptual
critiques have also been mounted. Several authors contend that the enclave
is such a narrow concept that it cannot be applied to more than a handful of
groups, thus limiting its utility.
LEVELS OF COETHNIC COLLABORATION
The ethnic enclave model emphasizes ethnic solidarity as the basis of mutually beneficial economic cooperation, yielding vertical and horizontal integrations among business owners and the maintenance of fair treatment and
cordial relations among coethnic employers and workers.
However, evidence suggests that the high levels of coethnic solidarity and
cooperation that underlie the enclave are relatively uncommon. Instead, a
review of research on various ethnic groups indicates the existence of internal conflicts and a high degree of mutual suspicion—based on class, region,
religion, lifestyle, history, ideology, ethnicity, and other factors—discourages
group-wide cooperation. Many studies conclude that the high levels of trust
and solidarity that underlie economic cooperation tend to exist within intimate subgroups defined by family, common regional origins, and various
shared experiences in education, politics, religion, or the military, and not
at the level of the entire coethnic population (Bodnar, 1985; Dallalfar, 1994;
Gold, 1992).
As a case in point, Light et al. (1994) found that the highly entrepreneurial
Iranian community of greater Los Angeles is made up of four ethnoreligious
subgroups—Armenians, Jews, Baha’is, and Muslims—and that the highest

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

levels of cooperation take place within them. Gold found a similar pattern of
subgroup cooperation among Israeli, Vietnamese, and Chinese Vietnamese
business owners in California (Gold, 1994a, 2002).
Because cooperation takes place within subcommunities and not among the
entire population, the potential for coethnic collaboration and the rewards
thereby generated are often less than those described as occurring among
exemplary ethnic enclave groups. As Portes (1987) suggests, the shared experience of flight from Castro provided early Cuban refugees with an especially
high level of ethnic solidarity that fostered economic collaboration. In contrast, other migrant nationalities often reveal lower levels of solidarity and
cooperation.
Coethnic cooperation is vital to the maintenance of good relations among
business owners and workers that encourage profitability, foster investment,
and preclude exploitation. Indeed, the benefits of this sort of collaboration are
well documented in the broader literature on ethnic entrepreneurship (Bailey
& Waldinger, 1991; Light, 1972; Wong, 1998).
At the same time, however, a significant body of research also discusses patterns of conflict that occur among business owners and workers of the same
nationality. It demonstrates that groups with high rates of self-employment
may avoid hiring coethnic workers, precisely because in-group solidarity
would require employers to provide coethnics with better wages and working conditions than those tolerated by outgroup members, thus reducing
owners’ profits as well as their control over employees (Chin, 2005; Gold,
1994b). In addition, because of shared culture and language, employers
fear that coethnic workers will use jobs as a means of building their own
careers—perhaps at the expense of their employers. Many assumed that
coethnic employees would ultimately become competitors.
In the following quote, Yossi, an Israeli contractor described being victimized by coethnic employees, and his resulting decision not to hire Israelis in
the future.
Investigator: Did you ever have friction with your Israeli employees?
Yossi: Well you see, Israelis, they took me as an example. They want to also
become self-employed. So they care too much about the details of how I run
my company, and I don’t like that. I don’t want to say that they are spying, but
they copy me which is perfectly okay, but as long as it helps me.
Investigator: Yeah. They’ll open their own business and then make it harder
for you.
Yossi: Right. But I understand that and I accept that as long as they are not cheating on me that’s fine with me. But if I need to be somewhere else for a while and
a potential customer comes to the work site and asks for a contractor and they

Ethnic Enclaves

9

give their [business] card or leave their number—that’s cheating. I don’t accept
it. So I need to be careful of Israelis and now I hire Mexican workers more.
A dishonest [Israeli] guy like that, I will eventually get rid of him. I will just
throw them from the job. Many times it has happened and I have been hurt. I
would not hire another Israeli. I’d hire a Mexican instead. That’s very unfortunate, but they can’t stop me to hire someone that needs the money.
(Gold, 2002, p. 77).

For their part, workers indicate that coethnic employers provide lower
wages, less pay and fewer benefits than is the case for jobs available in
the larger economy or from other ethnic groups. Accordingly, in many
immigrant populations, employers and workers make efforts to avoid
working with one another (Gold, 1994b, 2002; Kim, 1999; Saloutos, 1964).
Rather than employing coethnics, many studies suggest that undocumented Latinos (largely Mexicans) are favored by small business owners
ranging from native born Whites to a variety of immigrant populations
(Waldinger & Lichter, 2003).
A final factor that prevents numerous migrant groups in the United States
from relying on coethnic employment is the fact that many populations have
relatively low levels of the sort of class diversity that Portes and colleagues
identify as underlying the formation of enclaves.
Migrant groups that have the high levels of education, business experience
and access to capital required to open businesses often lack a significant
working-class population that would be interested in the kind of jobs
immigrant-owned businesses typically create. For example, few Israelis,
Russian-speaking Jews, Koreans, Taiwanese, Iranians, or Indians (all relatively well-educated groups) seek long-term employment as garment
workers, bus boys, assembly workers, or construction laborers. Accordingly,
these immigrant entrepreneurs have little choice but to hire out-group
workers (either the native-born or other immigrants) to fill lower level jobs
in their businesses. On the other hand, some immigrant populations that
seek employment in existing firms lack a sizeable middle class that possesses
the resources required to open businesses. Consequently, they must secure
jobs in companies owned by other ethnic and nationality groups (Delgado,
1993; Hondagneu-Sotelo, 1994; Waters, 1999; Wilson, 1996).
In sum, many of the central tenets of the enclave model assume the existence of very positive and wide-ranging forms of solidarity, social capital and
collaboration within immigrant communities that produce economic benefits. However, an inclusive review of literature about immigrant populations
indicates that these fortuitous conditions are rather rare.

10

EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

GEOGRAPHICAL CONCENTRATION
Another series of questions about the ethnic enclave formulation concern
its emphasis on geographical concentration. Before the late twentieth
century, scholars of immigration emphasized geographical concentration
as they examined topics such as residential segregation, the influence of
immigrant elites, urban villages, ethnic succession, employment patterns,
and intergroup conflict. Indeed, many of the classic studies of immigrant
communities concerned concentrated populations such as Little Italies,
Chinatowns, the Lower East Side, Poletowns, Bronzeville, and barrios,
such that geographic concentration became synonymous with immigrant
and ethnic communities in American society (Bodnar, 1985; Lyman, 1974;
Kornblum, 1974; Massey & Denton, 1993).
However, recent research on international migration places far less
emphasis on geographic concentration (Gieryn, 2000). Recent literature
suggests that because of real estate costs, poor quality schools, public safety,
availability of jobs and other factors, migrants increasingly settle in suburban
or exurban areas rather than in concentrated and ethnically defined urban
neighborhoods (Iceland, 2009; Massey, 2010; Zhou, Tseng, & Kim, 2008).
Skilled and professional immigrants often live close to where they work and
travel to ethnic business districts (where relatively few coethnic reside) only
on weekends. Such is the case for recently formed “ethnoburbs” (ethnic
suburbs) such as Koreatowns, Little Indias, Japantowns, Little Saigons, and
Chinatowns in several US and Canadian cities (Maira, 2002; Min, 2008;
Zhou, 2008).
Another body of research that challenges the importance of geographic
concentration among migrants is transnationalism (Basch, Glick Schiller,
& Blanc-Szanton, 1994; Faist, 2000). It argues that because of easy and
inexpensive access to communications and transportation technology,
migrants’ high levels of language and cultural skills and access to legal
status in multiple nations, immigrant entrepreneurs can maintain activities
in multiple settings, including those far from where they reside (Nonini &
Ong, 1997). For example, social and economic processes associated with
Silicon Valley bring together capital, entrepreneurs, workers, production
facilities, subcontractors and consumer markets located in multiple nations,
regions, and continents in order to produce products and generate profits
(Sassen, 2007; Saxenian, 2007; Senor & Singer, 2009).
Such findings about migrants’ increased mobility and lack of geographical confinement suggest that the enclave theory’s requirement that
entrepreneurs and workers share a common location may no longer hold,
and prevents the concept from addressing some of the most compelling
instances of contemporary immigrant entrepreneurship.

Ethnic Enclaves

11

A case in point involves the recent domination of the low-cost motel industry in the United States by Gujaratis. Members of this Indian ethnic group
own two million rooms and 100 billion dollars worth of property—yielding
what may be the largest ethnic enterprise in US history (Dhingra, 2012).
Because most live in their motels—which are located alongside highways
through the country—they lack geographical concentration. In short, the
enclave model’s continued reliance on geographical concentration even
as scholars of migration have increasingly moved away from a focus on
locality for understanding immigrant life, may limit the concept’s enduring
relevance.
Scholars who feel that the ethnic enclave formulation is too narrow have
suggested that the more inclusive concept of the ethnic economy—selfemployed members of a given group as well as their coethnic employees—
should be used instead (Light et al., 1994, p. 66). This would allow the
analysis of a wide range of economic activities among numerous groups and
include both workers and owners in a manner not amenable to the more
rigid and limiting definition of the ethnic enclave (Bean & Stevens, 2003;
Light et al., 1994; Logan, Alba, & McNulty, 1994).
THE ETHNIC ENCLAVE AND SOCIAL POLICY
Stories about disadvantaged minority groups making it into the US middle
class through self-employment are inspiring. The achievements of Cubans,
Jews, Japanese Americans, and Koreans are indeed impressive and speak to
these groups’ entrepreneurial achievements and ability to rise above the substantial obstacles of poverty and discrimination to achieve rapid and near
complete entry into the upper middle class.
However, as we have seen, the number of migrant groups that have created
viable enclaves is limited. Systematic research on self-employment suggests
that small businesses are subject to high rates of failure, and can be established only with substantial investments of effort, knowledge and capital.
In fact, economist Timothy Bates contends that given the amount of human
capital required, immigrant businesses often provide a poor (rather than generous) return on their owners’ investments of human and financial capital.
“The college graduate running a retail store, quite simply, is underemployment” (Bates, 1997, p. 259; Light & Bonacich, 1988).
The authors of the enclave formulation do not prescribe entrepreneurship
as a cure-all for economic difficulties. However, a number of scholars and
policy makers cite research praising ethnic entrepreneurship to support their
endorsement of market-based solution for social and economic problems.
Given the sizeable risks of failure associated with small enterprises, it may
be unwise to devote too much attention to self-employment as the way out

12

EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

of economic malaise. This is especially the case for those lacking in financial and human capital who are especially likely to fail (Fairlie & Rabb, 2008;
Gold, 2010).
During the past decade, US census data indicate that self-employed immigrants, minorities and women have received very poor earnings from their
enterprises (Bergman & Tolbert, 2005). Because of the limited rewards available to most entrepreneurs in stagnant or declining economies, world-class
immigrant entrepreneurs of the sort that created Silicon Valley have shown
little interest in the United States during the great recession. This pattern has
been decried by business journalists who observed their shrinking entry into
the United States precisely at a time when the economic growth that they
were hoped to generate was sorely needed (Hohn, 2012). As a case in point,
a Washington Post article questioned whether “the period of unprecedented
expansion of immigrant-led entrepreneurship that characterized the 1980s
and 1990s has come to a close” (Harrison, 2012).
For all these reasons, the enclave model’s celebration of immigrant businesses as a viable solution to problems of economic growth, job creation
and social and economic inequality may be excessive. While immigrant businesses do have the potential to generate benefits for coethnic communities
and the larger society, they create relatively few well-paid jobs, and like all
small businesses, are subject to high rates of failure, especially in depressed
regions and during recessionary periods.
Finally, as Portes notes, the life span of the enclave is fairly short, generally
limited to a single generation because immigrant entrepreneurs encourage
their children to obtain a college education and leave the enclave in favor of
professional careers (Gold, Light, & Johnston, 2006; Goldscheider & Kobrin,
1980). For this reason, Pyong Gap Min (2008) refers to the high rates of business ownership observed among particular migrant groups as serial middleman entrepreneurship. Current owners are expected to sell off their businesses in fairly short order to more recently arrived populations.
THE CONTRIBUTIONS OF THE ETHNIC ENCLAVE FORMULATION
Despite these critiques, the enclave formulation and associated literature
have transformed popular understandings of ethnicity and self-employment
in contemporary society. Since the concept’s formulation, the academic
community, policy makers and the general public have increasingly
acknowledged the benefits of immigrant and ethnic communities’ self-help
strategies, and the utility of migrants’ own cultural forms in improving
group members’ lives as well as addressing social and economic problems
faced by the larger society.

Ethnic Enclaves

13

Drawing from the findings of this scholarship, a wide range of scholars
and policy makers have engaged in extensive research and become much
more aware of the potential benefits—economic and social—associated with
immigrant and ethnic businesses. The findings thereof have been incorporated into a variety of local, state, and federal programs and philanthropic
projects such as business development initiatives, enterprise and empowerment zones, and microloan programs, which seek to facilitate the growth
of immigrant and minority business for community development (Bates,
1997; Gold, 2010; Light & Gold, 2000). Nonprofit agencies, universities, and
government officials have come to regard immigrant entrepreneurship as
a viable, desirable and low cost source of jobs, income and community
revitalization (Arab American News, 2012; Gold, 2009; Woodward, 1997).
While scholars continue to disagree about the extent to which immigrantowned businesses can solve major economic problems, and argue about the
potential ability of a wide range of nationality and ethnic groups to replicate
the optimal combination of resources, opportunities and contexts associated
with the exemplars of enclave populations such as Cubans, Jews, Koreans,
and Japanese that define the concept, the potential benefits derived from
immigrant and ethnic business remain persuasive and are likely to yield
additional social and economic dividends in the future. For these reasons,
the ethnic enclave has proven to be a useful and productive catalyst for
social research and policy making.
FUTURE RESEARCH
Future research on the ethnic enclave is likely to focus on aspects of the formulation that have been subject to critique. These include revising the concept to determine if and how noncoethnic laborers, subcontractors and the
other economic actors could be incorporated into enclaves such that the benefits could be extended beyond a single nationality.
Another topic of potential refinement involves the role of geographical concentration. Given the increasingly transnational lives of ethnic
entrepreneurs, we would like to know if forms of regional or even global
collaboration are capable of producing the same kinds of economic benefits
associated with geographically concentrated coethnic businesses. A third
area for future study concerns the life span of enclaves. Can the benefits of
collaborative immigrant entrepreneurship be extended to last longer than
one generation?
Finally, we note that each of the case studies of enclaves was located in
the United States. Given that immigrant and ethnic entrepreneurship is a
global phenomenon, it might be productive to determine if ethnic enclaves
can be found beyond the unique economic and ethnic contexts of the United

14

EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

States. Research on this question might begin with an examination of highly
entrepreneurial migrant populations in other national settings, such as Chinese in Southeast Asia, Indians in East Africa, or South Asians in the Emirates.
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FURTHER READING
Fairlie, R., & Robb, A. M. (2008). Race and entrepreneurial success: Black-, Asian-, and
White-owned businesses in the United States. Cambridge, MA: MIT Press.
Light, I. (1972). Ethnic enterprise in America: Business and welfare among Chinese, Japanese
and Blacks. Berkeley: University of California Press.
Light, I., & Gold, S. J. (2000). Ethnic economies. San Diego, CA: Academic Press.
Portes, A. (2010). Economic sociology: A systematic inquiry. Princeton, NJ: Princeton
University Press.
Portes, A., & Bach, R. (1985). Latin journey: Cuban and Mexican immigrants in the United
States. Berkeley: University of California Press.
Sanders, J. M., & Nee, V. (1987). Limits of ethnic solidarity in the ethnic enclave economy. American Sociological Review, 52, 745–767.

STEVEN J. GOLD SHORT BIOGRAPHY
Steven J. Gold is Professor and Associate Chair in the Department of
Sociology at Michigan State University. His interests include international
migration, ethnic economies, qualitative methods, and visual sociology. The
past chair of the International Migration Section of the American Sociological Association, Gold is the author, coauthor, or coeditor of seven books.
Together with Rubén G. Rumbaut, he is the editor of The New Americans,
a scholarly book series of over 70 volumes from LFB Publishers. Gold
received the Charles Horton Cooley Award for Distinguished Scholarship
in Sociology from the Michigan Sociology Association in 2007.
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18

EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

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