female ethnic minority. if we run these regressions over time, the same broad pattern emerges. white men earn more than any of the other three categories ( ethnic minority males and females and white females ), although all of these pay gaps have shrunk somewhat over the past 25 years ( chart 24 ). pay gaps for ethnic minority males have tended to be a little smaller, but have also fallen less rapidly. pay gaps for ethnic minority women, while halving over the period, remain strikingly high. all speeches are available online at www. bankofengland. co. uk / speeches chart 24 : conditional gender wage gap under specification difference in lnpay 0. 05 ‐ 0. 05 ‐ 0. 1 ethnic minority male vs white male ‐ 0. 15 ethnic minority female vs white male ‐ 0. 2 ‐ 0. 25 gender pay gap ‐ 0. 3 ‐ 0. 35 1994 ‐ 1998 1999 ‐ 2003 2004 ‐ 2008 2009 ‐ 2013 2014 ‐ 2019 source : ons labour force survey and bank of england calculations. note : a negative pay gap in this chart indicates that the sub - group earns less than white men. just because a pay gap can be explained by a set of individual and work - specific characteristics does not mean it is necessarily either reasonable or justifiable. differences in these characteristics may themselves suggest inequalities or biases that need rectifying. it is interesting to examine what our regression results tell us about the relative importance of various factors in determining pay gaps. to assess this, we run separate regressions for white men, white women, ethnic minority men and ethnic minority women as the effect of various factors on pay is not homogenous for these groups. some key findings include : ( a ) education. the “ penalty ” for having no qualification, compared to having a degree, is on average 39 %. that penalty exists irrespective of gender or ethnicity. the penalty is not equal across these groupings, however. this penalty is highest for white women, at 41 %, and lowest for ethnic minorities at 33 %. the story is slightly different when we compare degrees with “ other ” qualifications. for ethnic minorities, where university degrees from abroad often end up in this category, the penalty is a lot smaller, at around 24 %, compared with non - ethnic minorities. ( b ) age. compared to the earnings of the 25 - 29 age group, each subsequent age group earns more up to around the mid -

outside the uk earn considerably less than white people born outside the uk. this in part reflects compositional effects, as a higher proportion of non - uk born ethnic minorities have no qualifications compared to their white counterparts. all speeches are available online at www. bankofengland. co. uk / speeches chart 16 : granular ethnicity gaps by country of origin, sample average ethnicity groups mixed / multiple ethnic groups indian pakistani bangladeshi chinese any other asian background black / african / caribbean / black british other ethnic group ‐ 50 ‐ 40 ‐ 30 ‐ 20 ‐ 10 ethnicity pay gap, per cent non ‐ uk born uk born source : ons labour force survey and bank of england calculations. note : a positive ethnicity pay gap in this chart indicates that ethnic minorities earn less than their white counterparts, whereas a negative ethnicity pay gap indicates that ethnic minorities earn more than their white counterparts. on average, ethnic minority women earn more than white women, whereas ethnic minority men earn less than white men ( chart 17 ). this is also true in the latest data. unconditionally, there is a clear and well - defined pay gap for females, a clear and well - defined pay gap for ethnicity but, somewhat surprisingly, no clear, well - defined pay gap for ethnic minority females. this is a third puzzle in the unconditional pay data. all speeches are available online at www. bankofengland. co. uk / speeches chart 17 : ethnicity pay gaps by gender gender female male ‐ 15 ‐ 10 ‐ 5 ethnicity pay gap, per cent sample average source : ons labour force survey and bank of england calculations. note : a positive pay gap in this chart indicates that ethnic minorities of this gender earn less than their white counterparts of this gender, whereas a negative pay gap indicates that ethnic minorities of this gender earn more than their white counterparts of this gender. section 4 : explaining pay gaps in this section, we explore the factors contributing to gender and ethnicity pay gaps. accounting for individual and job characteristics helps us to estimate conditional gender and ethnicity pay gaps. can pay gaps be explained by characteristics of the individuals ( such as their level of education or location ) or the jobs they are doing ( such as the sector or occupation )? how much of the pay gap remains “ unexplained ” once these characteristics are accounted for? as well as providing a greater understanding of the drivers of pay gaps, this approach helps resolve some of the puzzles otherwise apparent in the unconditional pay gap data. the