Ethnic minority groups and wage gaps: Is there a connection?

Author: Simonetta Longhi
Institution: University of Essex
Type of case study: Research

About the research

There are relevant differences between wages of white British people and wages of people belonging to ethnic minorities (the so-called ‘wage gaps’). This study focuses on the wage gaps of selected ethnic and religious minority groups at the mean and across the wage distribution to analyse to what extent these gaps are the results of unfavourable characteristics of people belonging to ethnic minorities (for instance, due to lower levels of education on average) and to explain why such wage gaps differ across minority groups.

The research findings suggest that, within all ethnic and religious minority groups analysed in this study, the second generation tends to achieve higher wages than the first generation, but the amount explained by the identified characteristics does not necessarily increase with generation.

In short, this study illustrates that there are striking differences in wages between ethnic and religious groups in Great Britain: Indian Hindus have the highest wages and Pakistani Muslims the lowest; Indian Muslims fare better than Pakistani Muslims but worse than Indians who are Hindus.  The experience of Indian Muslims appears to be somewhat closer to that of Pakistani Muslims than to Indian Hindus. Most importantly, differences in wages across groups seem to be driven by the types of jobs that people are employed in, given their qualifications. These data demonstrate the extent to which minorities could be disadvantaged by worse personal or job characteristics or by labour market discrimination and inform general policy decisions. Most of the disadvantages of the analysed ethno-religious groups are due to the type of occupation (SOC) where people work (in most cases they concentrate in low-paying occupations). No information is available concerning whether the choice of occupation is driven by personal choices (preferences for some types of jobs) or it is itself a constraint (not being able to find work in a different occupation).

Methodology

The analysis is based on the use of all quarters of the Quarterly Labour Force Survey from 2002 to 2009.  Participants are selected based on their ethnicity, religion and country of birth: white British Christians are compared with Indian Hindus, Indian Muslims and Pakistani Muslims. For all groups there is a distinction between those who are born abroad and those who arrived to the UK after age 11 or older (1st generation) and those who are born in the UK or born abroad but arrived to the UK younger than age 11 (2nd generation). Decomposition methods were used to compare wages of these five minority groups.

Publications

This research was featured in the following academic journal:

Longhi S., Nicoletti C., and Platt L. (2012) ‘Explained and unexplained wage gaps across the main ethno-religious groups in Great Britain’. Oxford Economic Papers, pp. 1-23. doi:10.1093/oep/gps025 Retrieved 2 September 2013 from http://oep.oxfordjournals.org/content/65/2/471.full.pdf+html

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