Ethnic externalities and 2nd generation immigrants

I analyze the role of regional ethnic capital – defined as the average years of schooling of ethnic groups – in the educational attainment of young second generation immigrants in Germany and whether results are sensitive to regional aggregation. I find evidence for externalities of ethnic capital for ethnic groups at the regional level. A higher average education of ethnics makes attendance of higher-quality secondary schools more likely. Moreover, the marginal effect of the externality is increasing in the ethnic concentration in the region. However, if higher than regional aggregates are used for the measurement of ethnic capital, no externalities are detected.