The reduction of inequalities in the labour market both between ethnic groups and between local areas indicates improved access to jobs because a diverse workforce is socially and economically desirable. We construct and analyse a unique evidence base of the labour-market circumstances at the neighbourhood level. We use the 2001 Census data for England and Wales to examine the impact of age, sex, birthplace, and educational qualifications on the employment of ethnic minorities nationally. We compute locally expected employment on the basis of these relationships and local characteristics, and compare it with locally observed employment. Our analysis demonstrates that 1.1 million new jobs are required to bring every ethnic group in every locality up to the average England and Wales employment rate. National ethnic-group differences account for most of this local job deficit; local variation in demographic composition and human capital account for a smaller proportion of the jobs deficit. Residual neighbourhood effects have both a geography common to each ethnic group (for example, a gradient of higher jobs deficits in the Midlands, the North of England, and Wales), and some group-specific characteristics (for example, more favourable outcomes for Pakistani and Bangladeshi groups in the North than might have been expected). The findings and approach allow targeting employment policies geographically and thematically. In addition, the on-line evidence base (http://asp.ccsr.ac.uk/dwp) is a public resource which can be used to investigate local outcomes and to prioritise remedial action. © 2008 Pion Ltd and its Licensors.