Immigration and citizenship laws that discriminate by race, ethnicity, and national origins are increasingly illegitimate in contemporary democracies, yet laws that grant privileged access and membership to immigrants who share natives' ethnicity persist. This enduring positive selection rests upon the assumption that co‐ethnicity fosters integration. Countering this logic, this article centers on co‐ethnics' insertion into local labour markets. It draws from a case study of Aguaviva, Spain, a depopulating village in which both co‐ethnic Argentines and Romanian immigrants reside. The analysis qualifies the trend of deracialization in immigration and citizenship policy and shows that positive preferences do not uniformly foster integration. In dual labour market systems, co‐ethnics struggle because they are not different enough for secondary sector jobs reserved for immigrant “others,” yet in the primary sector they enter into direct competition with natives.