Labor Market Inequalities Amongst University Graduates Born in the United Kingdom: What Drives Wage Differentials between Ethnic Groups?

This study examines whether UK-born university graduates from Black, Asian, and Mixed/Other ethnic backgrounds experience wage penalties in the UK labor market. Drawing on restricted-access data from the Annual Population Survey, this paper provides solid evidence of ethnic pay inequalities, even after controlling for a comprehensive set of higher education, demographic, and occupation-related characteristics. Wage gaps are startlingly more pronounced for Black employees, standing at 16.7% for men and 4.5% for women compared to equally qualified White workers. The wage disparities hold up against a series of robustness checks and Oster’s method of correcting for selection on unobservables, suggesting racial discrimination.