How did public policies shape labor market integration of young Mexican-Americans in the U.S. and Turks in Germany in the 1980s? To explain the relationship among states, markets, and immigrant minorities, this study connects demand-side approaches (public policies, labor market segmentation) with supply-side ones (human capital, network, and immigrant enclave perspectives). The "dual system" of vocational training in Germany is part of a class-oriented corporatist political and policy structure, while the American framework of ethnically segmented pluralism is embedded in conflicts between ethnically or racially categorized groups. Exclusion of Mexican-American school leavers, as compared to European Americans, has resulted in income poverty, while Turkish youths have experienced higher rates of unemployment than German youth. Close attention is paid to the impact of school-work transitions on marginalization, especially the formation of an immigrant "underclass".