With the continuing influx of a large number of immigrants in the United States, the urban labor market segmentation along the lines of race/ethnicity, class, and gender has been drawing considerable attention in recent years. This dissertation focused on the phenomenon of ethnic niches, i.e., industries and occupations dominated by a particular race/ethnic group. Using data from 5% Public Used Microdata Samples and a confidential dataset extracted from the Decennial Long Form Data 2000, this study suggests that living arrangements increase the chances of niche employment for most racial/ethnic groups, even after controlling human capital and some local context factors. However, there is a substitution effect between personal socioeconomic status and location factors. Further, a case study of Chinese male and female immigrants in the San Francisco metropolitan area indicates that living in Chinese residential concentrations and working in a Chinese dominated workplace are strongly related to the probability of niche employment. The results suggest that abundant ethnic resources in ethnic neighborhood and enclaves can provide certain types of labor market opportunities; however, it also indicates the limitation of these resources in helping ethnic minority or immigrant workers, especially women, move upward in the labor market hierarchy. This study also deploys a multilevel research approach to compare job earnings of white, black, Hispanic and Asian workers in their respective niche and non-niche sectors. The results show that working in different ethnic niches is the main source of earning inequalities among different racial and ethnic groups. Both native whites and blacks, especially black niche workers, benefit greatly from the increase of ethnic minorities and immigrants in the metropolitan area. However, both Asian and Hispanic immigrant niche workers suffer from the increase of their coethnic population. Overall, the study argues that whether it is the location of worker residences and workplace or the specific characteristics of the metropolitan location, space provides the container in which various causal factors interact with each other, and is a catalyst that can accelerate or inhibit the segmentation process.