Wealth among Indian-origin adults in the UK rose over the past decade, even as wealth gaps between ethnic groups widened, according to new research by the London School of Economics.
The study by the LSE’s Centre for Analysis of Social Exclusion found that since 2012-14, wealth gains were mainly seen among adults from the white British and Indian ethnic groups, while gains across Britain were concentrated at the top.
The research shows that median wealth rose for Indian-origin adults during this period, while the wealth gap between ethnic groups increased.
Adults from the Pakistani ethnic group saw a decline in wealth, while median wealth for Black African, Black Caribbean and Bangladeshi groups remained close to zero.
“Taken together, my findings underscore the cumulative disadvantages experienced by many individuals from ethnic minority backgrounds," said Dr Eleni Karagiannaki, LSE Assistant Professorial Research Fellow and author of the study released last month.
Her analysis found that although overall wealth increased, gains were unevenly distributed across ethnic groups.
“Since 2012/14, median wealth gaps between ethnic groups have widened sharply, with gains concentrated among adults from the white British and Indian ethnic groups," the research concludes.
“Median wealth rose substantially for adults in these groups but remained close to zero for those in the Black African, Black Caribbean, and Bangladeshi groups, while adults in the Pakistani ethnic group experienced a marked decline," it notes.
The study also found that UK-born individuals from the Indian ethnic group “outperform” both first-generation peers and white British counterparts, while UK-born individuals from the Pakistani, Bangladeshi, and Black Caribbean ethnic groups show “limited progress”.
Across all ethnic groups, including white British, wealth gains were higher among those at the top, “widening inequality not only between but also within groups”.
This led to different wealth mobility patterns, with upward mobility less common among individuals from Black African and Black Caribbean ethnic groups. Some groups, including people from Pakistani and Black African ethnic groups, faced a higher risk of downward mobility from the top.
The report found that homeownership and asset ownership, rather than the amount saved, drove much of the widening wealth gap.
“Disparities in income early in life which intensify during middle age, combined with limited savings — largely due to lower earnings and competing financial pressures, and to a lesser extent differences in saving habits — and delayed access to homeownership, lead to marked differences over the course of people’s lives," said Karagiannaki.
“This highlights the importance of putting policies in place that boost earnings, expand saving capacity, and improve access to asset markets. These measures will help close the wealth accumulation gap and increase the financial resilience of individuals from the poorest groups in society,” she added.
The research was funded by the British Academy under a BA Innovation Fellowship Scheme.
The analysis covered two stages: changes in ethnic wealth disparities between 2012/14 and 2021/23, and an age profile analysis of ethnic wealth gaps and differences in wealth determinants.
