How a host country can best assimilate immigrants is understandably on the minds of West European governments. This column presents new evidence that immigrants in Italy who live in neighbourhoods with a large share of non-Italians are significantly less likely to be in employment than their counterparts in less segregated areas. Furthermore, the negative effect of a large migrant share on employment is magnified by the presence of illegal immigrants in the neighbourhood. This suggests that keeping a large share of illegal immigrants in a country may exert negative externalities on those migrants who have legal status.