Recent studies have shown that ethnic minorities of immigrant origin are more likely to continue in education than students of the majority group with similar levels of achievement. Even though most research on this topic is still descriptive, different explanations have been proposed for these findings. The first explanation emerges from the social stratification literature on primary and secondary effects, which considers students’ decisions to continue in education a product of a rational strategy. According to this literature, the perception of labour market discrimination increases the costs of dropping out for ethnic minority students, who will therefore decide to continue into upper-secondary education more often than native majority students performing at the same level. The other explanation emerges from the literature on immigrants’ optimism and the positive selection of migration flows. According to these theories, ethnic minorities’ high continuation rates in education are a reflection of their ‘immigrant optimism’ and drive for success in the destination country. Building upon these prior investigations, this study aims to explain the high continuation rates to upper secondary education of ethnic minorities in England. First, I examine whether students’ anticipation of labour market discrimination motivates an ethnic compensation strategy in education, which translates into high educational expectations and, subsequently, high continuation rates to post-compulsory education. And second, I analyse the impact of students’ prior educational expectations on their transition rates to upper secondary education, particularly whether ethnic minorities’ early optimism eventually translates into actual educational choices. The survey Longitudinal Study of Young People in England (LSYPE) and the student census National Pupil Database (NPD) are used to test the hypotheses. The results show that the ethnic gap in expectations relative to the White British majority is not related to anticipated discrimination, and ethnic minority students who anticipate labour market discrimination do not make different educational choices compared to those who do not anticipate discrimination. In contrast, prior educational expectations represent the main factor driving the transitions of ethnic minority students, thus supporting the immigrant optimism explanation.