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The term ghetto historically meant the Jewish district of a European town, especially in Italy, before Napoleon freed the Jews from this confinement around 1800. The original Ghetto was the name given to the Jewish quarter of Venice (which still bears that name). By 1900 it came to mean the Jewish neighborhoods of New York City, and soon was applied to other ethnic neighborhoods in U.S. cities. There is a sense that the ghetto is closed—outsiders are not welcome.

After 1950 the term changed meaning to refer to big city neighborhoods in the U.S. that were over 90% black. Typically they are poor and crime-ridden, so the term "ghetto" picked up these connotations. "Inner city" is a synonym. Thus Martin Luther King said, "In the ghettos of Chicago...the problems of poverty and despair are graphically illustrated." A "ghetto blaster" is slang for a large and powerful stereo radio-DVD player.

By extension "ghetto" also means any closed, underpaid sector of the labor force which is hard to escape.