IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/15-241.html
   My bibliography  Save this paper

Estimating Hispanic-White Wage Gaps among Women: The Importance of Controlling for Cost of Living

Author

Listed:
  • Peter McHenry

    (College of William and Mary)

  • Melissa McInerney

    (Tufts University)

Abstract

Despite concern regarding labor market discrimination against Hispanics, previously published estimates show that Hispanic women earn higher hourly wages than white women with similar observable characteristics. This estimated wage premium is likely biased upwards because of the omission of an important control variable: cost of living. We show that Hispanic women live in locations (e.g., cities) with higher costs of living than whites. After we account for cost of living, the estimated Hispanic-white wage differential for non-immigrant women falls by approximately two-thirds. As a result, we find no statistically significant difference in wages between Hispanic and white women in the NLSY97.

Suggested Citation

  • Peter McHenry & Melissa McInerney, 2015. "Estimating Hispanic-White Wage Gaps among Women: The Importance of Controlling for Cost of Living," Upjohn Working Papers 15-241, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:15-241
    as

    Download full text from publisher

    File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1259&context=up_workingpapers
    Download Restriction: This material is copyrighted. Permission is required to reproduce any or all parts.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Heather Antecol & Kelly Bedard, 2002. "The Relative Earnings of Young Mexican, Black, and White Women," ILR Review, Cornell University, ILR School, vol. 56(1), pages 122-135, October.
    2. Enrico Moretti, 2013. "Real Wage Inequality," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 65-103, January.
    3. Fitzpatrick, Katie & Thompson, Jeffrey P., 2010. "The Interaction of Metropolitan Cost-of-Living and the Federal Earned Income Tax Credit: One Size Fits All?," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(3), pages 419-445, September.
    4. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    5. Winters, John V. & Hirsch, Barry, 2012. "An Anatomy of Racial and Ethnic Trends in Male Earnings," IZA Discussion Papers 6766, Institute of Labor Economics (IZA).
    6. Francisca Antman & Brian Duncan, 2015. "Incentives to Identify: Racial Identity in the Age of Affirmative Action," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 710-713, July.
    7. Dan A. Black & Amelia M. Haviland & Seth G. Sanders & Lowell J. Taylor, 2008. "Gender Wage Disparities among the Highly Educated," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 630-659.
    8. Tolbert, Charles M. & Sizer, Molly, 1996. "U.S. Commuting Zones and Labor Market Areas: A 1990 Update," Staff Reports 278812, United States Department of Agriculture, Economic Research Service.
    9. Heather Antecol & Kelly Bedard, 2004. "The Racial Wage Gap: The Importance of Labor Force Attachment Differences across Black, Mexican, and White Men," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    10. Banzhaf, H. Spencer & Farooque, Omar, 2013. "Interjurisdictional housing prices and spatial amenities: Which measures of housing prices reflect local public goods?," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 635-648.
    11. Peter McHenry & Melissa McInerney, 2014. "The Importance of Cost of Living and Education in Estimates of the Conditional Wage Gap Between Black and White Women," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 695-722.
    12. David Albouy, 2009. "The Unequal Geographic Burden of Federal Taxation," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 635-667, August.
    13. Derek Neal, 2004. "The Measured Black-White Wage Gap among Women Is Too Small," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 1-28, February.
    14. Amitabh Chandra, 2003. "Is the Convergence of the Racial Wage Gap Illusory?," NBER Working Papers 9476, National Bureau of Economic Research, Inc.
    15. Brian Duncan & Stephen J. Trejo, 2011. "Tracking Intergenerational Progress for Immigrant Groups: The Problem of Ethnic Attrition," American Economic Review, American Economic Association, vol. 101(3), pages 603-608, May.
    16. Barry T. Hirsch & John V. Winters, 2014. "An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 930-947, December.
    17. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    18. Jonathan Fisher & Christina Houseworth, 2012. "The reverse wage gap among educated White and Black women," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 449-470, December.
    19. Fryer Jr., Roland G., 2011. "Racial Inequality in the 21st Century: The Declining Significance of Discrimination," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 10, pages 855-971, Elsevier.
    20. Kevin Lang & Michael Manove, 2011. "Education and Labor Market Discrimination," American Economic Review, American Economic Association, vol. 101(4), pages 1467-1496, June.
    21. Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012. "Who Suffers during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 27-48, Summer.
    22. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    23. Dumond, J Michael & Hirsch, Barry T & Macpherson, David A, 1999. "Wage Differentials across Labor Markets and Workers: Does Cost of Living Matter?," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 577-598, October.
    24. Peter McHenry, 2014. "The Geographic Distribution Of Human Capital: Measurement Of Contributing Mechanisms," Journal of Regional Science, Wiley Blackwell, vol. 54(2), pages 215-248, March.
    25. Trejo, Stephen J, 1997. "Why Do Mexican Americans Earn Low Wages?," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1235-1268, December.
    26. Dan Black & Natalia Kolesnikova & Seth Sanders & Lowell Taylor, 2013. "The role of location in evaluating racial wage disparity," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-18, December.
    27. Katie Fitzpatrick & Jeffrey Thompson, 2009. "The Interaction of Metropolitan Cost-of-living & the Federal Earned Income Tax Credit: One Size Fits All?," Working Papers wp204, Political Economy Research Institute, University of Massachusetts at Amherst.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olga Alonso-Villar & Coral del Río, 2021. "Privilege and Hindrance on the U.S. Earnings Distribution by Gender and Race/Ethnicity: The Role of Occupations in an Intersectional Framework with 12 Groups," Working Papers 2103, Universidade de Vigo, Departamento de Economía Aplicada.
    2. William J. Collins & Michael Q. Moody, 2017. "Racial Differences in American Women's Labor Market Outcomes: A Long-Run View," NBER Working Papers 23397, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter McHenry & Melissa McInerney, 2012. "Are Wage Premiums for Black Women Illusory? A Critical Examination," Working Papers 120, Department of Economics, College of William and Mary.
    2. Peter McHenry & Melissa McInerney, 2014. "The Importance of Cost of Living and Education in Estimates of the Conditional Wage Gap Between Black and White Women," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 695-722.
    3. Barry T. Hirsch & John V. Winters, 2014. "An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 930-947, December.
    4. William J. Collins & Michael Q. Moody, 2017. "Racial Differences in American Women's Labor Market Outcomes: A Long-Run View," NBER Working Papers 23397, National Bureau of Economic Research, Inc.
    5. Jamie H. Douglas & Michael D. Steinberger, 2015. "The Sexual Orientation Wage Gap for Racial Minorities," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(1), pages 59-108, January.
    6. Winters, John V. & Hirsch, Barry, 2012. "An Anatomy of Racial and Ethnic Trends in Male Earnings," IZA Discussion Papers 6766, Institute of Labor Economics (IZA).
    7. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    8. Joan Monras, 2020. "Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3017-3089.
    9. Christopher Bollinger & James P. Ziliak & Kenneth R. Troske, 2011. "Down from the Mountain: Skill Upgrading and Wages in Appalachia," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 819-857.
    10. John Winters, 2013. "Differences in quality of life estimates using rents and home values," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 377-409, October.
    11. Marianna Belloc & Paolo Naticchioni & Claudia Vittori, 2023. "Urban wage premia, cost of living, and collective bargaining," Journal of Economic Geography, Oxford University Press, vol. 23(1), pages 25-50.
    12. repec:hal:spmain:info:hdl:2441/31alui3q4c913als7a73udp5dv is not listed on IDEAS
    13. Tymon Słoczyński, 2020. "Average Gaps and Oaxaca–Blinder Decompositions: A Cautionary Tale about Regression Estimates of Racial Differences in Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 73(3), pages 705-729, May.
    14. Mary Kate Batistich & Timothy N Bond, 2023. "Stalled Racial Progress and Japanese Trade in the 1970s and 1980s," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(6), pages 2792-2821.
    15. Rodrigo Adão & Costas Arkolakis & Federico Esposito, 2019. "General Equilibrium Effects in Space: Theory and Measurement," NBER Working Papers 25544, National Bureau of Economic Research, Inc.
    16. Carrillo, Paul E. & Early, Dirk W. & Olsen, Edgar O., 2014. "A panel of interarea price indices for all areas in the United States 1982–2012," Journal of Housing Economics, Elsevier, vol. 26(C), pages 81-93.
    17. Olga Alonso-Villar & Coral Río, 2023. "Disentangling Occupational Sorting from Within-Occupation Disparities: Earnings Differences Among 12 Gender–Race/Ethnicity Groups in the U.S," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(3), pages 1-28, June.
    18. Ioannis Kospentaris & Leslie S. Stratton, 2022. "The Evolution of Labor Market Disparities between Hispanic and non-Hispanic Men: 1970-2019," Working Papers 2203, VCU School of Business, Department of Economics.
    19. Jonathan D. Fisher & Christina A. Houseworth, 2017. "The Widening Black-White Wage Gap among Women," LABOUR, CEIS, vol. 31(3), pages 288-308, September.
    20. Peter McHenry, 2011. "The Relationship between Location Choice and Earnings Inequality," Working Papers 112, Department of Economics, College of William and Mary.
    21. Lex Borghans & Bas Ter Weel & Bruce A. Weinberg, 2014. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," ILR Review, Cornell University, ILR School, vol. 67(2), pages 287-334, April.

    More about this item

    Keywords

    Hispanic-white wage disparities; Cost of living differentials; Immigrant and non-immigrant Hispanics; NLSY;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upj:weupjo:15-241. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.