Economic, social and spatial outcomes of ethnic diversity

Overview

Ethnic economy, economic benefits that ethnic diversity can bring to a city and bonding and bridging social capital.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is an ethnic economy, and how does it arise?

   Model answer

   An ethnic economy is the cluster of businesses owned and largely staffed by members of one ethnic group, typically serving that group in the first instance with familiar food, clothing, financial and personal services, and often supplied through co-ethnic wholesalers. It arises where a concentrated population creates a market for goods the wider economy does not supply, where discrimination and unrecognised qualifications close off employment elsewhere, and where family labour, informal credit and network recruitment lower the cost of starting a business.

2. 2

   Explain the economic benefits that ethnic diversity can bring to a city.

   Model answer

   Migrant and minority populations often have a young age structure and high labour-force participation, filling vacancies in sectors with shortages. High rates of self-employment add small businesses, extend retail and catering choice and keep marginal premises in use. Language skills and family contacts abroad support export trade and inward investment. A diverse workforce is associated in the research literature with higher rates of innovation and business formation, and distinctive commercial streets can become visitor attractions in their own right.

3. 3

   What economic disadvantages are commonly documented for minority ethnic groups?

   Model answer

   Over-representation in low-paid, insecure and shift work, and in sectors most exposed to downturns; unemployment rates above the national average for several groups; under-use of skills where overseas qualifications and experience go unrecognised, so that graduates work well below their level; concentration in self-employment with long hours and thin margins; and lower rates of home ownership and of accumulated wealth. These are patterns that vary substantially between groups, and some minority groups outperform the national average, so blanket statements are inaccurate.

4. 4

   What evidence is there that discrimination, rather than qualifications alone, produces unequal labour-market outcomes?

   Model answer

   The strongest evidence comes from matched-application field experiments, in which pairs of applications with equivalent qualifications and experience but names or details signalling different ethnic backgrounds are sent to real vacancies. Such studies repeatedly find lower call-back rates for the minority-signalled applications, which isolates the effect of the signal because everything else is held constant. Statistical evidence of pay and progression gaps that persist after controlling for education, sector and experience points the same way, though it is weaker on its own.

5. 5

   How can ethnic diversity affect the costs borne by public services?

   Model answer

   There are additional costs in interpreting and translation, in teaching the majority language to new arrivals, in adapting health and social services to different needs and practices, and in monitoring and enforcing equality duties. In strongly segregated cities, duplicated provision of schools, community facilities and even parallel transport for two communities is a substantial recurring cost, and interface security and the maintenance of barriers add more. Against this, working-age migrants generally contribute more in taxation than they draw in services during their working lives.

6. 6

   What social benefits are associated with ethnic diversity?

   Model answer

   A wider range of food, music, literature, festivals, languages and religious life; institutions such as places of worship, community centres and supplementary schools that add to civic life; personal networks that reach across countries; and increased opportunities for contact that, where it is sustained and between people of equal status, is associated in the research literature with lower levels of prejudice. Diversity also enlarges the pool of skills available to public services, notably in healthcare and education.

Other ways to work this

The same content, four other ways.

What is inside Levo

Six ways to work the same material.