Can religious affiliation explain ‘ethnic’ inequalities in the labour market?

Abstract The disadvantage experienced in the labour market by the ethnic groups currently in Britain has long been established. This study builds on earlier research by exploring how far religious affiliation can explain these inequalities. Distinguishing the effects of ethnicity and religion is difficult for both conceptual and technical reasons, due to the ‘identification’ problem. We therefore estimate the effects by focusing on cases where ethnicity and religion cross-cut each other, excluding those groups where ethnicity and religion coincide. The results demonstrate a strong ‘Muslim penalty’ for both women and men from different ethnic groups with respect to economic activity and unemployment. Furthermore, the apparent ‘ethnic’ effects estimated for Pakistanis and Bangladeshis in models that do not control for religion prove to be similar in magnitude to the effect of Muslim religion estimated in models from which Pakistanis and Bangladeshis have been excluded.