These large pay gap differences between different ethnic minority cohorts beg the question of whether it is useful to think about a single “ethnicity pay gap”. 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  Chart 15: Granular ethnicity pay gaps Ethnicity groups Mixed/Multiple ethnic groups  Indian  Pakistani  Bangladeshi  Chinese  Any other asian background  Black/African/Caribbean/Black British  Other ethnic group ‐40  ‐30  ‐20  ‐10  0  10  20  30  Ethnicity pay gap, per cent 2018  Sample average  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive ethnicity pay gap in this chart indicates that ethnic minorities earn less than their white counterparts, whereas a negative ethnicity pay gap indicates that ethnic minorities earn more than their white counterparts. Whether an ethnic minority individual is born in the UK or not also plays an important role in their pay. Chart 16 shows that ethnic minorities born in the UK (apart from those from Bangladeshi and Pakistani backgrounds) earn more than UK-born white people. Educational attainment is part of the explanation here. Although ethnic minorities born in the UK are a small part of our sample (2%), they are almost twice as likely to have a degree relative to white UK-born workers (40% versus 21%). In stark contrast, most ethnic minorities born outside the UK earn considerably less than white people born outside the UK.
This means the median observation for the white group occurs a lot earlier than for the ethnic minority group. As a result, when we run a pooled Oaxaca-Blinder decomposition, more weight is placed on later observations, where the ethnic minority population is larger leading to a negative ethnicity pay gap. This is at odds with time-series results which take into account the relative shares of the two groups in each year. To ensure that the results are comparable with the gender pay gap, we aggregated the results from the time series regressions using the share of the two groups in each year as weights. 24  All speeches are available online at www.bankofengland.co.uk/speeches  24  ethnic minority workers tend to be employed in regions where wages are higher (40% of ethnic minorities work in London) and tend to have higher qualifications than their white counterparts. Once these compositional effects are accounted for, the unexplained (“pay bias”) ethnicity pay gap is as large as for females. It averages just under 10 percentage points over the sample. This demonstrates one of the perils of interpreting raw, unconditional, pay gap data too literally. Replicating this analysis for people born in the UK reduces by half the size of the pay bias. Conversely, for people born outside the UK from ethnic minority backgrounds we estimate a significantly larger pay bias, at around 12 percentage points.