ISER Working Paper Series 2018-06
Low income dynamics among ethnic minorities in Great Britain
21 May 2018
Using data from Understanding Society, and robust estimation methods we find that Pakistani and Bangladeshi groups have the highest poverty entry rates (23-26%), followed by Indian, black Caribbean and black African groups (9-11%) and the white majority (6%). Indians and Pakistani's have the highest poverty persistence rates (66%), white majority the lowest (52%), the remaining groups around 55%. We find considerable within group heterogeneity: for most groups, education of the head of household (HoH) and household employment rate reduces poverty entry risk, while the presence of children increases it (education does not matter for black African and Bangladeshi groups and presence of children for Bangladeshi, black Caribbean and black African groups). We also find that living in London reduces the risk of poverty entry for Indians and white majority while ill-health of the HoH increases the poverty entry risk for white majority. The only factor that affects the risk of poverty persistence is household type although the type of household that matters varies across ethnic group. We also show that simple models which ignore initial poverty status and non-random attrition in estimating poverty persistence and poverty entry, underestimate (overestimate) the magnitude of poverty persistence for the Indian (black African) groups. Finally, we find scarring effects of experiencing poverty for black African and white majority groups.