Understanding the ethnic pay gap in Britain

Abstract

The pay gap between white British workers and other ethnic groups is largely in favour of whites, which suggests that discrimination might be a factor. However, discrimination can occur at two points, at entry to the job and within the job. In the former case non-whites might find it difficult to work in well-paid occupations; in the latter they obtain the same sorts of jobs as whites but receive less pay. There is therefore predominantly either job or wage discrimination. We use the British Labour Force Survey 1993–2008 to show that much of the pay gap is explained by occupational segregation while within occupations the ethnic pay gap is far less substantial. Occupational segregation therefore has strong negative effects, but if minorities are over-represented in occupations with a positive wage gap, then there is also a ‘protective’ element to segregation.