Classism, Discrimination And Meritocrascy In The Labor Market: The Case Of Chile

This paper examines the returns to the socioeconomic background of origin (or “class†) in the labor market in Chile. We employ individual data from several cohorts of graduates from the same program (Business and Economics) of a large and diverse public University in Chile. The data includes productivity measures uncommon in earnings differential studies, such as academic performance at University, school academic quality, and second language proficiency. Four measures of socioeconomic background are employed, which are significantly correlated. These are highly significant in explaining earnings despite their collinearity, and after controlling for various measures of productivity. The class wage gaps obtained by a Oxaca-Ramson decomposition amount to approximately 25 to 35 percent, which are remarkably higher than wage gaps reported in the literature for other workers’ characteristics such as gender, race and physical appearance. Moreover, the effect of class is more important in determining earnings than academic performance at University. Future research must focus on explaining the causes of this large return to class. These may emerge from some combination of pure employer discrimination, productivity-enhancing discrimination from other parties (such as consumers, peers and suppliers), statistical discrimination by employers and “pure†class-related productivity