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Data from a longitudinal sample of Cuban emigres are used to test competing hypotheses about the mode of incorporation of new immigrants into the U.S. labor market. Classic theories of assimilation assumed a unified economy in which immigrants started at the bottom and gradually moved up occupationally, while they gained social acceptance. Recent dual labor market theories define new immigrants mainly as additions to the secondary labor market linked with small peripheral firms. Multivariate analyses confirm the existence of the primary/secondary dichotomy but add to it a third alternative condition. This is the enclave economy associated with immigrant-owned firms. While most immigrant enterprises are samll, competitive ones, enclave workers show distinct characteristics, including a significant return to past human capital investments. Such a return is absent among immigrant workers in the secondary …