Explaining ethnic differencescan eExplaining Ethnic Differences: Can Ethnic Minority Strategies Reduce the Effects of Ethnic Penalties?

Some social scientists are sceptical of the explanatory power of ethnicity and seek to explain ethnic differences by references to non-ethnic factors such as discrimination. We challenge this scepticism by considering two theoretical objections: there is no such thing as ethnicity and ethnic categories are unable to explain social processes; and by showing how ethnic strategies affect outcomes that cannot be captured in standard ethnic penalty analyses, we offer a new way to examine ethnic penalties in unemployment. We calculate a set of net ethnic penalties and then analyse longitudinal labour-force data to examine how strategies such as self-employment change ethnic penalties in unemployment amongst six different ethnic groups in Britain. The results show that self-employment reduces the ethnic penalty for Indians, Pakistanis-Bangladeshis and others, but not for Blacks, White-Others and White-British. This supports the argument that ethnicity can provide an explanation for some of the ethnic differentials in the labour market.