This paper examines the economic consequences of living in ethnic enclaves for immigrants, using a natural experiment in Sweden. The study focuses on the impact of a government policy that distributed refugee immigrants across different regions, which is considered exogenous due to its strict application between 1987 and 1991. The authors find evidence of sorting across locations, where immigrants tend to cluster in certain areas. When this sorting is taken into account, living in enclaves is shown to improve labor market outcomes, with a standard deviation increase in ethnic concentration leading to a 4.2% increase in earnings. The paper also discusses the theoretical framework and empirical methods used to estimate the effects, including the use of instrumental variables and control function approaches. The results suggest that living in enclaves can enhance economic success for immigrants, contrary to some negative outcomes observed in other studies.This paper examines the economic consequences of living in ethnic enclaves for immigrants, using a natural experiment in Sweden. The study focuses on the impact of a government policy that distributed refugee immigrants across different regions, which is considered exogenous due to its strict application between 1987 and 1991. The authors find evidence of sorting across locations, where immigrants tend to cluster in certain areas. When this sorting is taken into account, living in enclaves is shown to improve labor market outcomes, with a standard deviation increase in ethnic concentration leading to a 4.2% increase in earnings. The paper also discusses the theoretical framework and empirical methods used to estimate the effects, including the use of instrumental variables and control function approaches. The results suggest that living in enclaves can enhance economic success for immigrants, contrary to some negative outcomes observed in other studies.