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Ethnicity and Earnings in Urban Peru

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Author Info

  • Nopo, Hugo

    ()
    (Inter-American Development Bank)

  • Saavedra, Jaime

    ()
    (World Bank)

  • Torero, Maximo

    ()
    (International Food Policy Research Institute)

Abstract

In this paper we study the relationship between ethnic exclusion and earnings in Urban Peru. Our approach to the concept of ethnicity involves the usage of instruments in many of its several dimensions: mother tongue, parental background, religion, migration events and race. In order to approximate what can be called racial differences in a context like the Peruvian in which “racial mixture” is the main characteristic of the population, we use a scorebased procedure to capture both the differences and the mixtures. By means of this procedure each individual is assigned intensities by pollsters in each of the four categories that correspond to the most easily recognized distinct racial groups in the Peruvian society: Asiatic, White, Indigenous, and Black. We find that the multidimensional race indicator is correlated with several human capital and physical capital assets, as well as with access to public services. Using an extension of the Blinder-Oaxaca (B-O) decompositions to allow comparisons among infinitely many groups, we find that a substantial part of the earnings differences between racial groups cannot be explained by differences in individual characteristics. The results suggests that among wage earners after controlling for a large set of characteristics, there are racially related earnings differences in favor of predominantly White individuals. In the case of the self-employed, none of the empirical distributions of earning differences attributable to race is substantially above zero.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 980.

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Length: 24 pages
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:iza:izadps:dp980

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Keywords: minorities; semi-parametric; race discrimination; wage differentials;

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References

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  1. Edward Telles & Nelson Lim, 1998. "Does it matter who answers the race question? Racial classification and income inequality in Brazil," Demography, Springer, vol. 35(4), pages 465-474, November.
  2. Hugo Ñopo, 2008. "Matching as a Tool to Decompose Wage Gaps," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 290-299, May.
  3. Robert Barsky & John Bound & Kerwin Charles & Joseph Lupton, 2001. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," NBER Working Papers 8466, National Bureau of Economic Research, Inc.
  4. Ruthanne Deutsch & Andrew Morrison & Hugo Nopo & Claudia Piras, 2005. "Working Within Confines: Occupational Segregation By Sex For Three Latin American Countries," The IUP Journal of Applied Economics, IUP Publications, vol. 0(3), pages 50-59, May.
  5. Scalera, Domenico & Zazzaro, Alberto, 2001. "Group reputation and persistent (or permanent) discrimination in credit markets," Journal of Multinational Financial Management, Elsevier, vol. 11(4-5), pages 483-496, December.
  6. Horowitz, Joel L., 2001. "The Bootstrap," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 52, pages 3159-3228 Elsevier.
  7. William A. Darity & Patrick L. Mason, 1998. "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 63-90, Spring.
  8. Hugo Ñopo, 2004. "The Gender Wage Gap in Peru 1986-2000: Evidence from a Matching Comparisons Approach," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1-2), pages 9-37, January-D.
  9. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach," Cahiers de recherche 9406, Universite de Montreal, Departement de sciences economiques.
  10. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
  11. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, May.
  12. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
  13. Chiswick, Barry R, 1988. "Differences in Education and Earnings across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 571-97, August.
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Citations

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Cited by:
  1. Risso Brandon, Fiorella & Pasquier-Doumer, Laure, 2013. "Aspiration failure: a poverty trap for indigenous children in Peru?," Economics Papers from University Paris Dauphine 123456789/12016, Paris Dauphine University.
  2. Nopo, Hugo & Atal, Juan Pablo & Winder, Natalia, 2010. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," IZA Discussion Papers 5085, Institute for the Study of Labor (IZA).
  3. Harry Anthony Patrinos & Emmanuel Skoufias, 2007. "Economic Opportunities for Indigenous Peoples in Latin America : Conference Edition," World Bank Other Operational Studies 8019, The World Bank.
  4. Moreno, Martin & Nopo, Hugo & Saavedra, Jaime & Torero, Maximo, 2004. "Gender and Racial Discrimination in Hiring: A Pseudo Audit Study for Three Selected Occupations in Metropolitan Lima," IZA Discussion Papers 979, Institute for the Study of Labor (IZA).
  5. Ñopo, Hugo, 2008. "An extension of the Blinder-Oaxaca decomposition to a continuum of comparison groups," Economics Letters, Elsevier, vol. 100(2), pages 292-296, August.
  6. Alberto Alesina & Eliana La Ferrara, 2004. "Ethnic Diversity and Economic Performance," NBER Working Papers 10313, National Bureau of Economic Research, Inc.
  7. Laure Pasquier-Doumer, 2005. "Perception de l’inégalité des chances et mobilités objective et subjective:une analyse à partir d’entretiens qualitatifs auprès de Liméniens," Working Papers DT/2005/17, DIAL (Développement, Institutions et Mondialisation).
  8. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  9. Nopo, Hugo & Valenzuela, Patricio, 2007. "Becoming an Entrepreneur," IZA Discussion Papers 2716, Institute for the Study of Labor (IZA).
  10. Lourdes Gallardo & Hugo Nopo, 2009. "Ethnic and Gender Wage Gaps in Ecuador," Research Department Publications 4625, Inter-American Development Bank, Research Department.
  11. Máximo Torero & Marco Castillo & Ragan Petrie, 2008. "Ethnic and Social Barriers to Cooperation: Experiments Studying the Extent and Nature of Discrimination in Urban Peru," Research Department Publications 3246, Inter-American Development Bank, Research Department.

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