Ethnicity and UK graduate migration: An identity economics approach

Abstract This paper reports on the employment migration behavior of non‐White ethnic minority graduates in the United Kingdom for the 2018/2019 graduation cohort, which is the last cohort to enter the labor market before the COVID‐19 pandemic. Using data from the new Graduate Outcomes survey and controlling for a rich set of background characteristics, the findings indicate that ethnic minority graduates are more likely than their White counterparts to find work in ethnically diverse areas of the United Kingdom after leaving higher education. An identity utility framework is then formalized that combines identity economics with traditional approaches of human capital theory and job search theory. A test of an ethnic identity‐based hypothesis reveals that Asian, Black, and Mixed‐background graduates are comparatively more likely to migrate to areas with higher ethnic diversity levels, rather than less diverse areas. In addition to traditional explanations based on human capital theory and job search theory, this paper argues that these patterns are best explained by ethnic identity norms, which introduce a preference for working in ethnically diverse places. However, the results should be interpreted with some caution because of concerns related to heterogeneity within the ethnic group classifications used in the paper and possible omitted and unobserved variables.