Despite the extensive literature on the labour market outcomes of migration, little attention has been given to labour market inequalities within ethnic economies containing internal ethnicity. This article, using a field-study, multi-segmented labour market approach and the enclave hypothesis, contributes to the literature by demonstrating the key roles of different migration patterns and ethnic disparities in shaping labour market segmentation. It focuses on how and why Kurdish migrants are located in the lower segments of the labour market in their shared ethnic (migrant) economy in London. It argues that the Kurds’ underprivileged position associated with an ethnic penalty for them in the UK results from their relatively recent migration history, (un)documented asylum status and the ongoing persecution against them in Turkey. The article concludes that different migration histories, particular motivations for migration and ethnic disparities stratify migrants into distinct segments of the labour market in the country of destination.