While most previous research on immigrants’ assimilation refers to the residual disadvantage that remains in empirical analyses of economic outcomes as a general ‘ethnic penalty’, this current paper disentangles the ‘ethnic penalty’ by dividing it into four components: individual characteristics, country characteristics, the social environment in host country, and the policy environment in host country. This study tests the effects of these four components on three economic outcomes: employment, labor force participation, and household income. Data from the European Social Survey, the Migrant Integration Policy Index, the UN, and the World Bank are integrated here. Findings show that the main reasons for immigrants’ disadvantage in terms of labor force participation and household income are both origin and host country characteristics, while the effects of ethnic origins, social exclusion, and policies are weaker. However, ethnic origins and social exclusion actually play a central role in determining unemployment of immigrants. © 2016, Springer Science+Business Media Dordrecht.

Immigration Ethnic penalty Western Europe discrimination Labor markets policy

labor migration Acculturation unemployment immigrant social exclusion racial disparity Western Europe labor market household income labor participation