ABSTRACT
In recent years, sociologists have shown growing interest in the economic consequences of participation in the ethnic economy in general. However, the understanding of this topic is decidedly mixed. On the basis of the segmented labor market and ethnic solidarity theories, Portes and his associates (Portes and Bach 1985; Portes and Jensen 1989, 1992; Wilson and Portes 1980) argued that the ethnic economy provides an alternative avenue for minority members, especially for those with limited English ability, to achieve socioeconomic advancement. Since there are few jobs available for people with low proficiency in English, the ethnic economy provides employment opportunities to ethnic group members who would otherwise be competing for these jobs. The ethnic community fosters the development of social capital, which in turn offers access to additional resources for ethnic group members and their businesses to survive and, in some cases, prosper. These additional resources include extended credit (Portes and Sensenbrenner 1993), pooled financial resources (such as the credit rotation associations suggested by Light (1972)), and lower labor costs (such as the informal support of family members studied by Sanders and Nee (1996)). Consequently, the economic returns of human capital resources such as education and work experience for those participating in the ethnic economy correspond closely to those for people working in the broader economy. This positive and benign understanding of the ethnic economy has been documented by a series of studies based on Cubans in Miami (Portes and Bach 1985; Portes and Jensen 1989), and Chinese in New York (Zhou and Logan 1989).
