Ethnic Penalties in the Labour Market: What Role does Discrimination Play? Anthony Heath Department of Sociology Oxford University

Aims To review both the gross and the net disadvantages (ethnic penalties) of ethnic minorities in the British labour market, focusing on unemployment in the second generation To explore some evidence on discrimination by employers To assess what role discrimination might play in accounting for the ethnic penalties

Gross and net disadvantages Gross disadvantages are the overall disadvantages, eg with respect to unemployment, before taking account of differences in age or education. They must not be equated with inequality of opportunity. Some ethnic groups are relatively young and have relatively low levels of education, and this might account (in part) for their high unemployment rates. Hence we need to look at the net disadvantages, after taking account of age and education.

Ethnic penalties Ethnic penalties are defined as the net disadvantages experienced by ethnic minorities after controlling for their educational qualifications and age (experience in the labour market). That is, they are estimates of the disadvantages experienced in comparison with equally-qualified members of the charter population of the same age.

Ethnic penalties 2 Ethnic penalties cannot be equated with discrimination, although discrimination is likely to be a major factor. Other possible factors include lack of bridging social networks, spatial mismatch, differences in aspirations and preferences, or alternative opportunities eg through the informal economy. Ethnic penalties in the labour market are quite distinct from pre-labour market penalties, eg in education (on which there is also considerable evidence)

Generations It is very important to distinguish between the First generation – born overseas and usually arriving in early adulthood – from the Second generation – born and educated in Britain. We can also identify a one and a half generation who arrived during their years of schooling, but we do not do so in this presentation.

Generations 2 There are many reasons why the first generation might fare badly in the labour market: Foreign qualifications Lack of fluency in English Foreign labour market experience Lack of familiarity with British practices. These reasons would not apply to the second generation to anything like the same extent.

Generations 3 Hence experience of the second generation is the key test of whether Britain extends principles of equality of opportunity to ethnic minorities. Recent French experience suggests that grievances among the second generation over perceived inequalities of opportunity may be one factor in contributing to social disorder. Inequalities of opportunity are also economically inefficient as well as socially unjust.

Data sources General Household surveys (pooled) Labour Force surveys (pooled) Public use sample of the 2001 Census Home Office Citizenship survey 2003.

Ethnicity Following standard Census practice we focus on visible ethnic minorities, namely Black Africans Black Caribbeans Black mixed Indians Pakistanis

Predicted probability of unemployment - Men

Predicted probability of unemployment - women

Unemployment - conclusions All visible minorities apart from Chinese experience ethnic penalties in finding work No sign that these penalties are reduced in the second generation These penalties operate at all educational levels Discrimination is possibly a major factor

Discrimination There are many different mechanisms that generate discrimination. Direct versus indirect discrimination by employers Statistical discrimination, error discrimination, tastes for discrimination Chill factor or prejudice from co-workers In practice hard to distinguish.

Methods for assessing presence of discrimination Statistical analysis – control for other processes and discrimination is the unexplained gap. Self-report studies of job refusals. Field experiments (audit studies).

HOCS 2003 on self-reported discrimination May I check, in the last five years, have you been refused or turned down for a job? [IF YES} Do you think you were refused the job for any of the reasons on this card? Your gender Your age Your race Your religion Your colour Where you live

Conclusions There is a pressing need for new field experiments to investigate discrimination. Statistical evidence suggests that There is a large ethnic penalty that is unexplained by standard variables Self-reported discrimination accounts statistically for around one-third of the penalty

A final thought We may be in the position of the early statistical analyses of the relation between smoking and lung cancer: we do not have proof of a causal connection, but the evidence strongly points in a particular direction. Policy would be wise to move in the same direction.