Income and Ethnic Fractionalization: Evidence from British Microdata

Awaworyi Churchill, S 2019, 'Income and Ethnic Fractionalization: Evidence from British Microdata', Economic Issues, vol. 24, no. 1, pp. 21-34.


Document type: Journal Article
Collection: Journal Articles

Title Income and Ethnic Fractionalization: Evidence from British Microdata
Author(s) Awaworyi Churchill, S
Year 2019
Journal name Economic Issues
Volume number 24
Issue number 1
Start page 21
End page 34
Total pages 14
Publisher Economic Issues Education Fund
Abstract Are income levels of a population affected by the degree of ethnic diversity in the population? This study attempts to answer this question, contributing to both the literature on the determinants of income, and the debate on the implications of ethnic diversity. Specifically, we examine the effects of ethnic diversity on household income. We argue that variations in the degree of ethnic diversity across British neighbourhoods can explain a substantial part of the differences in income levels. Using data from the European Values Study, we measure diversity using indices of ethnic fractionalisation for British neighbourhoods, and measure income using household income. We adopt econometric methods that account for endogeneity and find evidence of a negative effect of ethnic diversity on income. We further propose several potential channels that link ethnic fractionalisation to income. Specifically, we explore trust, social capital, discrimination and inequality as important channels through which ethnic diversity influences income. Results are robust to several sensitivity checks.
Subject Applied Economics not elsewhere classified
Keyword(s) Ethnic diversity
ethnic fractionalisation
Britain
income differentials
Copyright notice © Gold Open Access freely available under a Creative Commons Attribution 4.0 International (CC BY) licence.
ISSN 1363-7029
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