Background:
According to data from the most recent Wealth and Asset Survey (WAS) in 2016-18, the average wealth of households with a head identifying as Bangladeshi and Black African was £30,000, while the corresponding level for white-headed households was £282,000, nearly 9.5 times greater (Khan, 2020). The fact that ethnic minority groups, on average, have less wealth than White-British households is major source of concern, particularly because wealth is strongly related to inequality of opportunity, access to housing, good public schools, postsecondary education as well as to households’ capacity to insure consumption against income shocks. Although the existence of ethnic wealth gap in the UK is well-documented (e.g. Khan,2020; Bangham,2020), a limitation faced by existing studies is that sample size in the Wealth and Asset Survey (WAS) (i.e. the major survey for the measurement of wealth in the UK) is too small for a comprehensive analysis of ethnic wealth gaps across the wealth distribution. For this reason, most studies tend to focus on the mean/median of the wealth distribution. Yet looking across the wealth distribution is necessary as highlighted by recent evidence (Advani et al, 2020) which showed that some migrant groups are highly present at the top-end of the distribution. Moreover, though the source of the ethnic wealth gap has been extensively discussed, less is known about the relative contribution of different factors in driving the wealth position of different ethnic groups. Again, sample size has been a crucial limiting factor behind this.
Aims:
The project will make use of longitudinal data from Understanding Society, which in addition to comprehensive measures of wealth include booster samples for various ethnic minority groups to build a better understanding of the scale and the causes of ethnic wealth gap at different points of the wealth distribution.
The project will extend the evidence base regarding the ethnic/racial wealth gap by:
- Documenting differences in net worth for different ethnic and racial groups (and the corresponding wealth gaps between various BME groups and white-British people) at the mean and at different points of the net worth distribution (e.g., the 10th, 25th, 50th, 75th, and 90th percentiles) using data from the latest wave of Understanding Society (currently wave 8 which provides information on UK households’ wealth holdings for the period 2016/18);
- Estimating the corresponding racial/ethnic wealth gaps for the various components of net worth (i.e., financial wealth, housing wealth, housing/mortgage debt, financial debt) to identify the components of wealth for which the gaps are the largest;
- Analysing the source of racial/ethnic wealth gap using semi- parametric decomposition approach to provide estimates of the share of ethnic wealth gap at different points of the wealth distributions that can be explained by income and various demographic differences between ethnic groups (e.g., age, household size, educational attainment regional distribution etc);
- Exploring how differences in the patterns of wealth accumulation of different ethnic groups contribute to the observed ethnic/racial wealth gaps exploiting the longitudinal dimension on wealth provided by Understanding Society waves 4 and 8 (which cover respectively the years 2012-14 and 2016-18), along with information about saving behaviour included in each Understanding Society wave.
Researcher:
Eleni Karagiannaki is an Assistant Professorial Research Fellow at the Centre for Analysis of Social Exclusion at the London School of Economics and Political Science and a Faculty Associate at the International Inequalities Institute at LSE. She has done work on range of issues relating to poverty and inequality measurement and analysis with a particular focus on understanding how the tax and benefit systems, the labour market and the families interplay to shape socio-economic inequalities.
Dr Eleni Karagiannaki's current areas of research include:
- Income and wealth distribution analysis: Measurement and analysis of income and wealth inequality; poverty, material deprivation, social exclusion; intrahousehold inequality and poverty; intergenerational mobility and intergenerational transfers
- Public Economics and Social Policy: Redistributive role of social and fiscal policies both within and across generations
- Household Economics: Economic behaviour and decision-making processes of single and multi-person households