Labour Economics

Ethnic minorities are a fact in Britain and in most developed countries of the world, where the standard of living is above poverty. In the 1991 census more than 3 million people in Britain classified themselves non-white, which is about 5. 5% of the British population (55 million). From that percentage about 28 % were Indians, 17% were Afro-Caribbean and 17 % Pakistanis (Owen 1992-1995). British and ethnic minorities (Chinese, Pakistanis, Afro-Caribbean, Indians) live in the same society.

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Both groups have the same education opportunities and the same rights for a fair Labour market. Therefore, someone could say that there should not be discrimination in the Labour market among white and non-white labour force, since both groups face equal education opportunities, thus can have same skills and background knowledge. Moreover, the legislation against racism that Britain passed 20 years ago, could encourage this statement. In reality though, the situation is different; ethnic minorities do face discrimination in the labour market.

This discrimination appears a) as higher unemployment to non-white ethnic minorities and b) as low earnings to non-white individuals comparing to that of white individuals (Blackaby et al, 1998). In this paper, we will mostly focus on whether the ethnic wage discrimination in the British labour market is real. We will look at a few studies related on the subject and make the relative conclusions. The survey of Denny et al (1997), focus on the distribution of earnings between natives and immigrants in Britain from 1974-1993.

This survey has used data from the GHS (General Household Survey) and the aim is to look at the entire distribution of the wage gap rather than mean wage differences by applying Jenkins(1994) methods. Moreover, in this study they take into account aversions to discrimination and make measures of the wage gap that reflects to these aversions. From equation 1. 6 we can see that discrimination will exist if there is a difference between the reference and actual wages, which according to Jenkins(1994) can be a proof of “heterogeneity in discrimination across distributions of individuals”.

Jenkins (1994) has introduced his own measures of analysing distributions: Lorenz Curve and Gini coefficient. This measure focus in plotting two graphs: Firstly, the cumulative predicted reference against the cumulative sample share for each share of the migrant sample, which is known as the Generalizes Lorenz Curve (GLC). Secondly, the predicted reference wage per capita against the cumulative sample share, which is known as the Generalized Concentration Curve (GCC).

In the presence of discrimination the GCC will be above the GLC and in case of no discrimination the two curves will match. The first column represents the total migrants versus the natives. The second column compares migrants that are white with natives that are white and the 3rd column non-white migrants against non-white natives. As we can see the degree of migrant discrimination is always higher for the non-white group and the degree of non-white discrimination is always higher for the migrant group.

Therefore, we can state that the non-white migrants faced real wage-discrimination. Conclusion Using these two surveys as a reliable background in wage discrimination issues we can conclude that ethnic wage gap in Britain is a fact. From the early 70’s until the early 90’s migrants and non-white people faced wage discrimination comparing to natives. Even though the anti-racist legislation has passed 20 years ago, the wage-differentials are still high (over 10%) making it look as an unsolved enigma for the British government.