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The ethnic penalty is defined as the economic and non-economic disadvantages ethnic minorities experience in the labour market compared to non-ethnic minority groups of the same human and social capital. Heath and Ridge originally look at the ethnic penalty by making comparisons between two groups in Britain, whites and blacks. They note that unemployment of black African men is twice as high as unemployment of white men. Using 2001 UK census data, Johnston et al. suggests that all ethno-religious groups experienced ethnic penalties in the labour market, with the exception of White British ethno-religious groups.
Hasmath, examining the Canadian case, concludes that exclusionary discrimination is not the only potential explanation for ethnic penalties. Conditions such an individual's social network, a firm's working culture, and a community's social trust should be strongly factored. Emerging work by behavioral economists, psychologists, and sociologists reinforce the premise that the ethnic penalty is not simply discrimination. They suggest that non-cognitive factors must be taken into consideration for explaining the ethnic penalty.
- 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.
- Hasmath, R. (2012). The Ethnic Penalty: Immigration, Education and the Labour Market. Aldershot: Ashgate