Ethnic penalty in sociology is defined as the economic and non-economic disadvantages that ethnic minorities experience in the labour market compared to other ethnic groups. As an area of study among behavioral economists, psychologists, and sociologists, it ranges beyond discrimination to take non-cognitive factors into consideration for explaining unwarranted differences between individuals of similar abilities but differing ethnicities.
The concept of the ethnic penalty was first discussed by Oxford sociologist Anthony Heath. Heath originally looked at the ethnic penalty by making comparisons between two groups in Britain, whites and blacks, noting that unemployment of black African men was twice as high as unemployment of white men. Using 2001 UK census data, Johnston et al. suggests that all ethno-religious groups in the UK experienced ethnic penalties in the labour market, with the exception of White British ethno-religious groups. Carmichael and Woods additionally show that "the penalties paid vary considerably between the minority groups" studied, in the case of black, Indian, Pakistani, and Bangladeshi workers in the United Kingdom. Simpson, Purdam, Tajar, et al. also found that this differs between UK-born members of an ethnic minority and those of the same ethnicity born abroad – UK-born males are more likely to be unemployed than males from overseas, while UK-born women "tend to do better in the labour market than their overseas-born counterparts". Beyond this, Simpson et al. confirmed that this disadvantage is not tied to "concentration of ethnic minorities in deprived areas"; those of an "ethnic minority were still twice as likely to be unemployed than their White counterparts... even in areas that are predominantly White".
Elyakim Kislev's work divides the ethnic penalty into four components: individual characteristics, country characteristics, the social environment in host country, and the policy environment in host country. Kislev shows that the main reasons for immigrants’ disadvantage in terms of labor force participation and household income are both origin and host country characteristics, while the effects of ethnic origins, social exclusion, and policies are weaker. However, ethnic origins and social exclusion actually play a central role in determining unemployment of immigrants.
- Heath, A.F. and J. Ridge (1983) “Social Mobility of Ethnic Minorities”, Journal of Biosocial Science, Supplement No. 8: 169-184.
- Johnston, R. et al. (2010) "Ethno-Religious Categories and Measuring Occupational Attainment in Relation to Education in England and Wales: A Multilevel Analysis’, Environment and Planning A 42(3): 578-591.
- Carmichael, F.; Woods, R. (2000). "Ethnic Penalties in Unemployment and Occupational Attainment: Evidence for Britain". International Review of Applied Economics. 14 (1): 71–98. doi:10.1080/026921700101498.
- Simpson et al. (2006) "Ethnic Minority Populations and the Labour Market: An Analysis of the 1991 and 2001 Census", Department for Work and Pensions.
- Kislev, Elyakim (2016-09-19). "Deciphering the 'Ethnic Penalty' of Immigrants in Western Europe: A Cross-Classified Multilevel Analysis". Social Indicators Research. 134 (2): 725–745. doi:10.1007/s11205-016-1451-x.