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Ethnic Poverty: Causes, Implications, and Solutions



Poverty manifests itself in various forms, including a lack of income and productive resources to ensure sustainable livelihoods, hunger and malnutrition, ill-health, increased morbidity and mortality from illness, limits on or lack of access to education and other basic services, homelessness and inadequate housing, unsafe environments and social discrimination and exclusion. It is also characterised by a lack of participation in decision making and in civil, social, and cultural life. An ethnic group is a social group that shares a common and distinctive history, culture, religion, language, or the like. Ethnic poverty occurs when there is systemic poverty for an ethnic group.
Ethnic Poverty: Causes,
Implications, and Solutions
Tolulope Olarewaju
and Temitayo Olarewaju
Staffordshire Business School, Staffordshire
University, Stoke-on-Trent, UK
Peter A. Allard School of Law, The University of
British Columbia, Vancouver, BC, Canada
Ethnic inequality;Ethnic minorities;Poverty
Poverty manifests itself in various forms, includ-
ing a lack of income and productive resources to
ensure sustainable livelihoods, hunger and mal-
nutrition, ill health, increased morbidity and mor-
tality from illness, limits on or lack of access to
education and other basic services, homelessness
and inadequate housing, unsafe environments,
and social discrimination and exclusion. It is
also characterized by a lack of participation in
decision-making and in civil, social, and cultural
life. An ethnic group is a social group that shares a
common and distinctive history, culture, religion,
language, or the like. Ethnic poverty occurs when
there is systemic poverty for an ethnic group.
Poverty is a multidimensional phenomenon that
goes beyond a lack of income and material
resources (Revenga et al. 2002;UN2018). Its
manifestations include hunger and malnutrition,
limited access to education and other basic ser-
vices, social discrimination and exclusion, as well
as a lack of participation in decision-making
(UN 2019). Ethnicity as a concept is deeply
related to the general practice of alienation and
of identity branding characterizing both intra-
global and intra-national relations (Brand et al.
1974). In many of these relations, opportunities,
rights, and privileges are functions of who one is
and where one is from (Odeyemi 2014).
In the modern era, the world has witnessed an
unprecedented integration of peoples, customs,
traditions, and businesses, and the supposedly
boundless economic opportunities offered by
globalization (Meyer and Peng 2016). Globaliza-
tion was believed to be capable of narrowing or
collapsing various forms of primordial identity
that had thrived on the linkage of factors such as
racial, tribal, cultural, linguistic, and religious dif-
ferences (Odeyemi 2014). A related goal of glob-
alization was to spur a new wave of economic
growth and create opportunities for all peoples to
partake in, irrespective of ethnicity. Unfortu-
nately, there are strong links between poverty
and ethnicity in many countries around the
world (Agostini et al. 2010; Churchill and Smyth
2017), and research shows that it is the unequal
© Springer Nature Switzerland AG 2020
W. Leal Filho et al. (eds.), No Poverty, Encyclopedia of the UN Sustainable Development Goals,
concentration of wealth across ethnic lines that is
detrimental rather than diversity per se (Alesina
et al. 2016).
To attain Goal 1 of the UN Sustainable Devel-
opment Goals (SDGs) and end poverty in all
forms everywhere (UN 2018), ethnic poverty
will need to be addressed. This entry synthesizes
the research on ethnic poverty in developing and
developed countries and provides suggestions on
how the phenomenon can be tackled.
Ethnic Poverty in Developing Countries
Developing nations with diverse ethnic groups
usually report higher poverty rates (Bidgman
2008). While it is often also useful to measure
non-material dimensions of poverty (Revenga
et al. 2002), extreme poverty is measured as living
on less than US$1.90 a day (UN 2018). The
extremely poor are more likely to be found in
developing countries and research shows that
extreme poverty exists along ethnic lines in such
contexts (Churchill and Smyth 2017; Olarewaju
In Sub-Saharan Africa, research shows that
ethnic diversity has often meant that the ethnic
groups in power are incentivized to distribute
resources to themselves at the expense of national
growth (Braathen et al. 2000; Mickiewicz and
Olarewaju 2020), making inter-ethnic group
action, such as addressing poverty, difcult and
increasing the probability of violent conicts
(Collier 2007; Elu and Loubert 2013). Gradín
(2016) used an index of wealth to measure the
economic status of households in Asia and
showed that the poverty gap between ethnic
groups was astonishingly large. In some cases,
the differential in poverty rates was above 60 per-
centage points. This was especially true in the case
of Siraikiand other linguistic groups in
Pakistan, scheduled tribes in India, or Hill
Dalitin Nepal. In Vietnam, the ethnic majority
populations of Vietand Hoawere relatively
well off compared to other minority populations
(Imai et al. 2011). However, not even upper-mid-
dle-income countries are exempt from ethnic pov-
erty as in Bulgaria and Romania, poverty seems
prevalent among the Romain comparison to
other ethnic groups (Revenga et al. 2002).
Some ethnic groups usually accumulate a num-
ber of disadvantages across different dimensions,
such as having lower education, higher unem-
ployment, larger families, a higher concentration
in rural areas, or lower development of their com-
munities, that help to explain their higher poverty
rates (Sullivan and Ziegert 2008; Gradín 2016).
For example, socioeconomic factors usually lie at
the root of the higher poverty rates reported for
disadvantaged ethnic groups in India and Nepal,
while location factors lie at the root of ethnic
poverty in the Philippines (Gradín 2016).
A constellation of impediments disadvantage eth-
nic minorities and lead to ethnic poverty in devel-
oping countries.
Historical Antecedents and Conflicts
In this era of cultural pluralism, ethnicity and
nationalism have been the basis of politics in
many nations (Davis and Kalu-Nwiwu 2001;
Michalopoulos and Papaioannou 2016). Devotion
to one ethnic group over another, a term often
referred to as tribalism,has been one of the
most denitive causes of social crisis, injustice,
inequality, and religiopolitical instability, espe-
cially in developing countries (Davis and Kalu-
Nwiwu 2001; Záhořík 2011). Such ethnic biases
and the resulting activities have also been per-
ceived as a major obstacle to overall politico-
economic development. Remarkably, almost all
of the countries in South Asia and Sub-Saharan
Africa, the two regions that together account for
85% (629 million) of the worlds poor (UN 2019),
were carved up into colonial territories by
Europeans without regard to ethnic boundaries
and without due consideration for their idiosyn-
cratic compatibility (Braathen et al. 2000;
Odeyemi 2014). Pre-colonial and post-colonial
caste categorization and persecution also continue
to inuence access to economic opportunities in
many of these countries, with lower-ranked
castes and ethnic groups largely remaining in
poverty (Levien 2018).
Correlated with historical antecedents, ethni-
cally related wars and genocides have also
reduced the pace of achieving the SDGs,
2 Ethnic Poverty: Causes, Implications, and Solutions
particularly SDG 1. Rather than diminishing eth-
nic biases, modernization and other economic and
technical advances have provided new issues that
fuel ethnic biases within many societies, where
they have remained a major and recurrent
devourer of human lives and potential (Odeyemi
2014). Protracted conicts over the rights and
demands of ethnic or religious groups have caused
more misery and human loss of life than have any
other types of local, regional, and international
conict since the end of World War II (Harff
2018). Related to this, Braathen et al. (2000)
argue that conicts labeled as ethnic or tribal
usually have underlying sets of complex interac-
tive causes.
Unequal Access to Education and
Strong links exist between the lack of education
and poverty (Brown and Park 2002; Olarewaju
et al. 2019). South American research shows that
low levels of education and uency in English
contribute to high Hispanic poverty rates and are
also contributing factors to differences in poverty
among Hispanic ethnic groups (Sullivan and
Ziegert 2008). In Africa, the colonial govern-
mentspreferential treatment of various ethnic
groups often resulted in the preferred ethnic
groupseducational ascendancy over the other
groups. For example, in Kenya, the low educa-
tional attainment of minority groups can be traced
to the past patron-client relationship between the
preferred ethnic groups and colonial govern-
ments, a trend which has continued after the colo-
nial era (Schech and Alwy 2004).
Moreover, compared to the ethnic groups com-
prising the majority of the population, minority
ethnic groups in developing countries usually
have access to poorer infrastructure (Suryadarma
et al. 2006). Such subpar infrastructure may hin-
der economic performance for the ethnic group
with lesser access (Baulch et al. 2010). Ethnic
disparities in access to healthcare have also been
reported in post-apartheid South Africa (Kon and
Lackan 2008), but the infrastructure need not
always be tangible. For example, research shows
that in Vietnam, minority ethnic groups were
unable to obtain positive educational benets
because of language barriers when the language
of instruction was that of the majority ethnic
group (Baulch et al. 2010; Cuong et al. 2015).
Disproportionate Employment and Pay
The low educational attainment of ethnic minority
groups often has a knock-on effect on employ-
ment and pay potential. The Roma,for exam-
ple, fare poorly in the labor market compared to
other populations in the countries that they reside.
This is largely due to low educational attainments
and skill levels (Revenga et al. 2002). However, it
is often somewhat unclear if the employment and
pay disparities that exist along ethnic lines are as a
result of negative stereotypes (Ruhlandt et al.
2020). Research from Asia also shows that ethnic
minorities often earn less than the dominant ethnic
group (Kabeer 2006), and similar results have
been found in Africa (Olarewaju 2018).
This dimension is complicated because, in
many developing countries, ethnicity appears to
inuence access to choice of location and infra-
structural facilities, which in turn determine
access to and use of productive resources that
impact economic opportunities and income
(Engvall 2007). For example, research from
Vietnam shows that wealthy communes, where
the dominant ethnic groups reside, have greater
access to employment opportunities because of
their superior access to transport infrastructure
and factories (Imai et al. 2011). In Africa, parallel
advantages arise from ethnic groupsclose loca-
tion to colonial commerce centers, and these
advantages soon result in material distinctions
(Schech and Alwy 2004).
Solutions to Ethnic Poverty in Developing
Recent research on ethnic minority development
and poverty reduction in Vietnam stresses the
need for nuanced and targeted policies, programs,
and projects that address the specic needs of
targeted ethnic communities (Kozel 2014). Rather
than a standardized national approach to poverty
reduction that may have been appropriate in the
past, current recommendations favor taking a pro-
vincial or regional focus with components aimed
Ethnic Poverty: Causes, Implications, and Solutions 3
at disadvantaged groups in the population, such as
youth, migrants, older women, or members of one
or more particular ethnicity. Activities should be
based on the evidence of success in one ethnic
minority area or more, and some of the possible
approaches to consider for future initiatives that
reduce ethnic poverty in developing countries
include the following:
1. Offering business training for ethnic minorities
2. Expanding vocational training for ethnic
minority youth, with an emphasis on skills
with an identied local market in the agricul-
ture and non-agriculture sectors
3. Providing credit, agricultural extension train-
ing, and market information to formal and
informal farmersgroups, on a demand basis,
that responds to locally identied ethnic minor-
ity needs
4. Scaling up bilingual education in larger ethnic
minority languages
5. Offering incentives for responsible industrial
development and local enterprise investment in
ethnic minority areas, providing diversied
employment options without the social costs
of migration
6. Recruiting and developing the capacity of
leaders from local ethnic groups in both formal
governance structures such as commune and
district peoples committees and traditional vil-
lage leaders
7. Involving local and international non-
governmental organizations to a greater extent
in cooperation with the government and the
private sector, such as through provincial inno-
vation funds for local social projects
Gradín (2016) reported that in the specic case
of the scheduled tribes in India, their higher con-
centration in rural areas and their poorer perfor-
mance in the labor market were remarkable
determinant factors of their ethnic poverty. On
the contrary, the Philippines was outstanding for
having regional wealth inequalities as the main
factor associated with most of the ethnic poverty
gap of their disadvantaged ethnicities. The authors
also showed that in a period of generally strong
economic growth, the wealth of all ethnic groups
in India and the Philippines increased. Thus, to
tackle ethnic poverty in developing countries,
strategies and policies that lift the whole popula-
tion out of poverty via general economic growth
should be encouraged (Fox et al. 2015;UN2019).
These should be complemented with targeted pol-
icies that meet the educational, employment, loca-
tional, and infrastructural needs of ethnic minority
groups so as to create better employment and pay
outcomes (Churchill and Smyth 2017; Cuong
et al. 2015). Caste-based differences and preju-
dices must also be eliminated (Levien 2018).
Lessons can also be learnt for the rst devel-
oping country to achieve the rst Millennium
Development Goal of halving poverty; China
(WorldBankGroup 2020). Although the Chinese
government has been accused of ethnic discrimi-
nation particularly in its re-education camps and
there is substantial poverty among ethnic minori-
ties in rural China (Brown and Park 2002;
Gustafsson and Sai 2009), between 1990 and
2011, China lifted 439 million poor people out
of poverty including many ethnic groups, contrib-
uting signicantly to global poverty reduction.
With a continuous increase in grain production
for 11 years since 2004, China has been able to
feed nearly 20% of the worlds population with
less than 10% of the worlds cultivated land
(WorldBankGroup 2020). Chinas experience in
poverty alleviation entails the following (Liu et al.
2017; WorldBankGroup 2020):
1. Continuous reform and innovation to sustain
economic growth with policies favoring poor
regions and poor people
2. Integrating poverty alleviation into the national
development strategy and organizing large-
scale poverty alleviation programs with
targeted programs for women, children, dis-
abled people, and ethnic minorities
3. Adopting a development-oriented poverty alle-
viation approach that focuses on development
as the fundamental way to get out of poverty
and building poor peoples capacity to help
4. Pursuing a strategy of balanced urban and rural
economic-social development, getting industry
to support agriculture and cities to support rural
4 Ethnic Poverty: Causes, Implications, and Solutions
5. Developing infrastructure, including roads,
water and sanitation, electrication, natural
gas supply, and housing
6. Mobilizing all resources for poverty reduction,
including both public and private sectors.
7. Integrating general and special favorable poli-
cies, development-oriented poverty allevia-
tion, and social safety nets
Ethnic conicts in many developing countries
have also reduced the pace of achieving SDG
1 (Odeyemi 2014). Irobi (2005) propounded that
ethnic conicts have been at the heart of the
development problems in Nigeria and South-
Africa, two of the largest economies in Sub-
Saharan Africa. Politicized ethnicity with roots
in colonialism has been detrimental to national
unity and socioeconomic well-being in both coun-
tries (Irobi 2005). Braathen et al. (2000) show
how ethnic conicts in Liberia, Somalia, the Dem-
ocratic Republic of the Congo, Uganda, and Chad
led to civil wars exacerbated by a struggle for
ethnic identities and resources as well as an under-
lying set of complex interactive causes. The activ-
ities of national-level institutions that promote
ethnic cohesion as well as international and inter-
governmental organizations like the United
Nations and World Bank that aim to maintain
international peace and security should be encour-
aged because these could help reduce ethnic con-
icts that worsen ethnic poverty in developing
country contexts (Kozel 2014;UN2018;
WorldBankGroup 2020).
Ethnic Poverty in Developed Countries
Poverty in developed countries is typically mea-
sured in relation to the average overall household
income. A threshold representing a proportion of
average incomes is calculated and those with
incomes below this threshold (typically 60% of
the median income or the minimum amount of
income needed to cover basic needs) are deemed
poor (Dhongde and Haveman 2015; Platt 2011).
This method is useful in illustrating the relation-
ship between different forms of economic
inequalities and poverty. For instance, a key
assessment of poverty in the USA is the Ofcial
Poverty Measure (OPM), which is a comparison
between a households income and the cost of
Generally, poverty has decreased substantially
for the overall population in most developed
countries since the 1960s, and trends over time
also show progress in shrinking the ethnic poverty
gap (Kazemipur and Halli 2000; Platt 2011).
According to the 2018 US Census Data, the
highest poverty rate by ethnicity was 25.4%
found among Native Americans, with blacks hav-
ing the second-highest poverty rate at 20.8%.
Hispanics of any race had the third-highest pov-
erty rate at 17.6%, while Asians had a poverty rate
of 10.1% as did whites (PovertyUSA 2018). The
ethnic poverty gap in the USA has practical impli-
cations for housing and healthcare affordability,
and food insecurity (Dhongde and Haveman
2015). A 2018 report by the Centre for American
Progress (CAP) highlighted the fact that African
American families had a fraction of the wealth of
white families, leaving them more economically
insecure and with far fewer opportunities for eco-
nomic mobility. In particular, African Americans
owned approximately one-tenth of the wealth of
white Americans. Less wealth translates into
fewer opportunities for upward mobility and is
compounded by lower income levels and fewer
chances to build wealth or pass accumulated
wealth down to future generations (Loury 2005).
In addition, black households were more likely to
experience negative income shocks but less likely
to have access to emergency savings (CAP 2018).
Several key factors exacerbate this vicious
cycle of wealth inequality for black households
in the USA. Black households, for example, have
far less access to tax-advantaged forms of savings,
due in part to a long history of employment dis-
crimination and other discriminatory practices
(Dhongde and Haveman 2015). A well-
documented history of mortgage market discrim-
ination also means that blacks are signicantly
less likely to be homeowners than whites, which
means they have less access to the savings and tax
benets that come with owning a home (CAP
2018; Hanson et al. 2016). Persistent labor market
discrimination and segregation also force blacks
Ethnic Poverty: Causes, Implications, and Solutions 5
into fewer and less advantageous employment
opportunities than their white counterparts
(Loury 2005). Thus, African Americans have
less access to stable jobs, good wages, and retire-
ment benets at work all key drivers by which
American families gain access to savings
(PovertyUSA 2018). Moreover, under the current
tax code in the USA, families with higher incomes
receive increased tax incentives associated with
both housing and retirement savings (CAP 2018;
Dhongde and Haveman 2015). Because African
Americans tend to have lower incomes, they inev-
itably receive fewer tax benets even if they are
homeowners or have retirement savings accounts.
The bottom line is that persistent housing and
labor market discrimination and segregation
worsen the damaging cycle of wealth inequality
for African Americans (CAP 2018; Loury 2005).
In the UK, the poverty rates in 2015 were about
50% for Bangladeshi groups, 47% for Pakistani,
40% for black, 35% for Chinese, and 25% for
Indian, compared with 19% for white ethnic
groups (Weekes-Bernard 2017). Minority ethnic
groups are also more frequently in persistent pov-
erty (Platt and Nandi 2020). For example, in con-
trast to 13% for white individuals, Caribbean,
Bangladeshi, African, and Pakistani individuals
had persistent poverty rates of 23%, 24%, 31%,
and 37%, respectively, in 20152016 (Weekes-
Bernard 2017). Within white groups in the UK,
poverty rates differ too. For example, Gypsy/Irish
travelers experience some of the highest unem-
ployment rates of all ethnic groups, and concen-
tration in low pay for some EU migrants is also
substantial (Weekes-Bernard 2017). This seems to
be particularly expressed in homelessness rates
for EU migrants with 36% of rough-sleepers
being from Central and Eastern European (CEE)
countries, 5% from African countries, and 4%
from Asian countries, even though a greater pro-
portion of EU citizens have work compared to
Black and Minority Ethnic (BAME) citizens
within the UK (Platt 2011).
Ethnic poverty is also recorded in other devel-
oped countries where there are indigenous peo-
ples. For example, the indigenous peoples in
Australia, Canada, and New Zealand have all
reported higher poverty rates (Cornell 2006).
It should also be noted that Western Europe has
witnessed an inux of Eastern Europeans and
skilled migrants in the last two decades. These
include ethnic minorities who have also reported
higher poverty rates and social exclusion
(Schmidt 1997; Wrench et al. 2016). Certain
drivers of poverty are important in explaining
the poverty variations for ethnic groups in devel-
oped countries.
Historical Factors
Australia, Canada, New Zealand, and the USA are
examples of settler societies, states in which the
now predominant population arises from immi-
grants, primarily from Britain, and the indigenous
population has become a displaced minority.
Supplanting the indigenous peoples in these coun-
tries entailed enormous indigenous resource
losses, the eventual destruction of indigenous
economies, a good deal of social disorganization,
precipitous population declines, and subjection to
tutelary and assimilationist policies antagonistic
to indigenous cultures (Armitage 1995). This his-
tory had catastrophic and long-lasting effects on
the original inhabitants. Indigenous populations
in each of these societies are now at or near the
bottom of the scale of socioeconomic welfare
(Cornell 2006).
The UK itself has a long history with ethnic
minorities dating back to the rst Jewish commu-
nity in 1070 (BBC 2020; MigrationMuseum
2017). The story of black people in the UK dates
back to when Romans ruled Britain and some
Chinese communities in the UK date back to the
arrival of Chinese seamen in Europe (Costello
2001; Platt and Nandi 2020). Since the 1940s,
there has been substantial immigration from
Africa, the West Indies, and the Indian Subconti-
nent as a result of the legacy of ties forged by the
British Empire (Piper 2018). France has also
followed similar historical patterns especially
with regard to the former French colonies
(Garbaye 2005).
There has been a centrality of race in the devel-
opment of the USA, with catastrophic conse-
quences for the Africans who were not invited as
settlers but forcefully brought to the country as
slaves (Panayi 1996). Formal and informal
6 Ethnic Poverty: Causes, Implications, and Solutions
constraints have prevented people of color from
participating fully in central components of eco-
nomic life, including employment, social mobil-
ity, and homeownership. Recently, racial biases in
the criminal justice system of the USA have been
highlighted (Hetey and Eberhardt 2018; Stewart
et al. 2020).
Educational Variations
In 1964, the Civil Rights Act of the USA ended
segregation and discrimination in the workplace,
and the Act was subsequently amended in 1972
with the addition of Title IX, to eliminate discrim-
ination in educational institutions (Brown 2004;
Fisk and Chemerinsky 1998). These changes
affected the institutional and normative barriers
to higher education for ethnic minorities (Everett
et al. 2011). Other countries have passed similar
laws with the result that ethnic groups are varied
in post-secondary educational attainment (Garcia
and Bayer 2005).
Research using UK data shows that both pri-
mary and secondary effects operate to produce
ethnic inequalities in educational attainments
(Platt 2011; Weekes-Bernard 2017). In general,
ethnic groups often appear disadvantaged educa-
tionally relative to the white majority, but when
socioeconomic variables are accounted for, some
ethnic groups are advantaged relative to the
white majority (Jackson 2012; Strand 2011).
Educational variations between ethnic groups are
also related to cognitive functions, perceived dis-
crimination, depression, birth-rates, incarceration-
rates, and healthy lifestyle choices (Assari et al.
2019; Leggett et al. 2019; Ward et al. 2019).
Employment and Pay Disparities
Despite facsimile policies that emphasize equal
access to education and employment in developed
countries, discrimination remains a critical barrier
to equal employment. Several studies have found
that both ethnic minorities and women are called
back for interviews 50% less frequently than com-
parable whites and males, hired less often for
high-skill jobs, and once hired are paid less
(Bertrand and Mullainathan 2004). Thus, despite
the increasing educational gains made by ethnic
minority individuals, many are overqualied for
the jobs that they do. Ethnic minority workers also
often report not being given pay rises and being
passed over for promotion (Zwysen and Longhi
2018). European research reveals that the regional
demand for labor also has a signicant effect on
the employment chances for most ethnic minority
groups, as do institutional arrangements and the
time period being considered (Bevelander and
Veenman 2004).
Another very important driver for the dispro-
portionately high poverty rates among ethnic
minority groups is the concentration of such
workers in low-paid work. Ethnic minority
workers are more likely to work in low-paid sec-
tors with limited progression opportunities and
lower wages. Lack of movement out of low-paid
work increases the risk of poverty among ethnic
groups. In addition, there is generally a lower
percentage of ethnic minority workers who
are managers, directors, and senior ofcials
(MacKenzie and Forde 2009; Netto et al. 2015).
In the face of barriers to employment and career
advancement, research indicates three main strat-
egies individuals use in relation to discourses of
ethnicity: rejecting, redening, and adopting dis-
cursively available positions (Van Laer and
Janssens 2017; Netto et al. 2015). These strategies
are characterized by inherent tensions and contra-
dictions, as all three involve both resistance and
compliance, simultaneously challenging and
reproducing discourses of ethnicity and relations
of power. Tensions arise as struggles come to
conict, forcing ethnic minority individuals to
make important tradeoffs in their career paths
that non-ethnic minority individuals do not have
to (Van Laer and Janssens 2017).
Entrepreneurship Inequalities
Entrepreneurship is an important route out of pov-
erty for ethnic minority individuals, particularly
for foreign-born migrants and recent arrivals in
developed countries (Pruthi et al. 2018). Early-
stage entrepreneurial activity among ethnic
minority individuals is twice that of the local
population in many developed countries (Daniel
et al. 2019; Levie 2007). European migrant entre-
preneurship is determined by some distinct push
factors, such as high unemployment rates and low
Ethnic Poverty: Causes, Implications, and Solutions 7
status in the labor market. In addition, informal
and labor-intensive sectors, the existence of an
underground economy, small companies, and tra-
ditional household structures all prompt migrant
entrepreneurship in Southern European countries
(Baycan-Levent and Nijkamp 2009).
Ethnic minority entrepreneurs (EMEs) in
developed countries have been responsible for
innovative businesses; but they usually face sig-
nicant challenges, including the lack of nancial
and social capital, an unfamiliarity with regula-
tions and the host countrys labor market, poor
management and communication skills, and
the liability of outsidership (Mickiewicz and
Olarewaju 2020; Ram et al. 2003). Thus, while
ethnic minority individuals are already a socio-
economically disadvantaged group, ethnic entre-
preneurs are in an even more precarious situation.
EMEs are traditionally associated with low
skilled, lower growth and hence low return sectors
such as retailing, restaurants, fast-food provision,
and personal services (Clark et al. 2017; Edwards
and Ram 2006).
Solutions to Ethnic Poverty in Developed
Underlying the drivers of poverty for ethnic
minorities in many developed countries are sev-
eral socioeconomic factors in addition to other
considerations, which include discrimination, rac-
ism, geographical location, demographics, and
migration status (Platt and Nandi 2020; Weekes-
Bernard 2017). The intersection of these factors
has serious consequences for ethnic minorities.
For example, ethnic minorities were particularly
affected by the COVID-19 pandemic in the UK
and USA. In particular, the risk of death for some
ethnic minority individuals who contracted
COVID-19 in these countries was two to three
times more compared to white individuals
(Aldridge et al. 2020). This disparity was a result
of the underlying social and economic risk factors
that ethnic minorities face, such as living in over-
crowded and urban accommodation, being
employed in riskier lower-skilled jobs, and having
reduced access to healthcare (COVID and Team
2020; Khunti et al. 2020).
Many of the drivers of poverty among
working-age groups across all ethnic groups are
broadly similar. Ethnic minorities consistently
report reduced access to education, lack of social
and nancial capital, unemployment, low pay, and
poor progression from low-paid sector work. This
suggests similar solutions for all groups, which
would lead to better-quality jobs and higher pay
(Platt 2019; Weekes-Bernard 2017). However,
given that some of the drivers of poverty, such as
higher unemployment and inactivity rates, dispro-
portionately affect ethnic groups, specic forms
of outreach activity and drawing on local knowl-
edge may be needed in these contexts. For exam-
ple, most of the research on ethnic poverty
conducted in Japan focus on explaining under-
achievement in relationship to buraku people,
zainichi Koreans, indigenous peoples, and new
migrants, and it is characterized using qualitative
research methods and more interpretative and
interactionist approaches to social science inves-
tigation (Okano 2019). Three major research tra-
ditions are dominant: (i) quantitative descriptions
of minority studentseducational achievements,
(ii) schooling processes in relation to discrimina-
tion, school interventions, and identity formation;
and (ii) home cultures (Okano 2019). The most
dominant tradition is schooling processes in rela-
tion to discrimination, school interventions, and
identity formation. One of the distinctive charac-
teristics of these studies is localization,whereby
the relationship is examined in selected localities
with a focus on a single ethnic group, rather than
as a national phenomenon (Okano 2019). Such
local approaches could offer solutions that give a
better t with localized experiences of poverty
experienced by ethnic minorities.
Similarly, government solutions to reduce eth-
nic poverty in developed country contexts include
interventions that ensure that education, training,
and apprenticeships are provided for ethnic
minorities as well as schemes that help tackle
low pay among ethnic minority workers
(Weekes-Bernard 2017). There is a need for pol-
icies that focus on education, skills, and training
for ethnic groups particularly digital, literacy, and
numeracy skills. Moreover, policies should also
be encouraged that monitor the workforce in
8 Ethnic Poverty: Causes, Implications, and Solutions
relation to ethnicity, which should include the
recruitment, retention, and progression phases of
jobs (Platt 2011). Authorities need to work with
employers to provide better-paid jobs and they
should do more to listen to and encourage
employers to hire a diverse range of skills and
experiences. It is advisable to consider putting
targets for ethnic minority representation on
boards, something that has proven successful in
the case of gender (Berkeley et al. 2006). It is also
important to recognize the benets of positive
discrimination in the labor market, rather than
view legislation to combat ethnic inequality as
red tape or political correctness (Berkeley et al.
2006). Mortgage market discrimination needs to
be eliminated as this would allow ethnic minori-
ties to take advantage of the savings and tax ben-
ets that come with owning a home (CAP 2018;
Hanson et al. 2016).
Access to nancing and government procure-
ment markets offer ways for EMEs to achieve
rapid expansion and establish viable enterprises
by leveraging their minority status and social net-
works (Bates et al. 2018; Shelton and Minniti
2018). Ethnic minority migrant entrepreneurs
can also make use of their professional and per-
sonal ethnic ties and prior experience of doing
business in their home country (Mickiewicz and
Olarewaju 2018; Pruthi et al. 2018). European
research also shows that the success of EMEs in
developed countries depends on the immigration
policy of the host country, the existence of a
co-ethnic community and its economic
embeddedness, the operation of social networks
among migrant communities, the possibility of
acquiring capital and other informal resources
among the ethnic community, and institutional
factors that encourage or discourage EMEs
(Baycan-Levent and Nijkamp 2009).
Concluding Summary
Goal 1 of the UN SDGs is to end poverty in all
forms everywhere (UN 2018). This cannot be
achieved without eradicating ethnic poverty
from both developing and developed countries.
Inequality and poverty have been shown to be
primary economic determinants of crime and vio-
lence, and excessive inequality may slow a
countrys economic development (Fosu 2015;
Lupton et al. 2018). Unfortunately, there is evi-
dence that ethnic differences in the experience of
poverty are large, intractable, and poorly under-
stood (Platt 2011).
Although it is conventional for economists,
policymakers, and governments to see the indi-
vidual as an atomized agent acting more or less
independently, seeking to make the best of oppor-
tunities at hand (Loury 2005). In actuality, indi-
viduals are members of nuclear and extended
families, belong to religious and linguistic group-
ings, have ethnic and racial identities, and are
attached to particular localities (Kozel 2014;
Loury 2005). An individuals location within
this network of social afliations substantially
affects access to various resources and the proba-
bility of being poor (Loury 2005; Olarewaju
In the worlds largest economy, the USA, bla-
tant types of racial discrimination widespread
prior to the 1960s are now infrequent (Danziger
et al. 2005). Indeed, many employers note their
commitment to non-discrimination in job adver-
tisements, and most real estate brokersofces
post statements about their dedication to equal
opportunities (CAP 2018; Hanson et al. 2016).
However, less obvious types of ethnic discrimina-
tion continue and contribute to persisting high
levels of racial segregation (Loury 2005). Some
brokers still do not show black and white
homeseekers the same housing, some under-
writers still do not provide home insurance to
units located in ethnic minority neighborhoods,
and some police ofcers stop drivers who are
black much more frequently than those who are
white (Danziger et al. 2005). Hiring patterns
documented by employer surveys suggest that
establishments located in the suburbs, particularly
small establishments serving mostly white cus-
tomers, continue to prefer white applicants over
African Americans (Holzer 2001; Loury 2005).
Thus, enforcement of existing equal employment
laws needs to be enhanced to ensure that all estab-
lishments abide by them (Danziger et al. 2005;
Loury 2005).
Ethnic Poverty: Causes, Implications, and Solutions 9
The main lessons from this entry reveal that to
reduce ethnic poverty in all contexts, ethnic
minorities should be given better access to educa-
tion, resources, infrastructure, and opportunities
to progress from low-paid sector work (Platt
2019; Weekes-Bernard 2017). In addition, there
is a need for policies that prevent all forms of
ethnic discrimination (Dhongde and Haveman
2015; Olarewaju 2019).
Around the world, ethnic minorities may also
experience non-economic forms of poverty
resulting from discrimination and structural
stigma (Churchill and Smyth 2017; Vang and
Chang 2019). They often face religious persecu-
tion, and even when they achieve high-level edu-
cational attainments and nd themselves in decent
jobs, they often report workplace discrimination
which can have implications for psychological
well-being and life satisfaction (Vang et al.
2019). Such economic and non-economic forms
of poverty have far-reaching consequences and
can affect life expectancy (Cornell 2006). It is
important that they are tackled for the
overall good.
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