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Diasporas play a fundamental role in explaining the location choice of new immigrants. We investigate the spatial dimension of diaspora externalities focusing on immigrants in Italian local labour market areas (LLMAs). We show that the net pull effect of diasporas spills over an estimated average distance of 82 km. We find evidence of negative spatial spillovers at greater geographical distances, suggesting a competition effect from neighbouring diasporas. Ethnic-specific labour markets and ethnic consumption externalities are important channels through which the distance–decay effects of diasporas take place. We also find that the spatial effects of diasporas are highly heterogeneous across gender and origin countries.

Distance from diasporas and immigrants’ location choice: evidence from Italy