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“It's not that I'm a racist, it's that they are Roma”: Roma discrimination and returns to education in South Eastern Europe

  • Niall O'Higgins

Purpose – This paper uses a unique survey of Roma and non-Roma in South Eastern Europe with the aim of evaluating competing explanations for the poor performance of Roma in the labour market. Design/methodology/approach – Following a descriptive analysis, econometric models are employed to identify the determinants of educational achievement, employment and wages for Roma and non-Roma. Limited information maximum likelihood (LIML) methods are employed to control for endogenous schooling and two sources of sample selection bias in the estimates. Non-linear and linear decomposition techniques are applied in order to identify the extent of discrimination. Findings – The key results are that: the employment returns to education are lower for Roma than for non-Roma whilst the wage returns are broadly similar for the two groups; the similar wage gains translate into a smaller absolute wage gain for Roma than for non-Roma given their lower average wages; the marginal absolute gains from education for Roma are only a little over one-third of the marginal absolute gains to education for majority populations; and, there is evidence to support the idea that a substantial part of the differential in labour market outcomes is due to discrimination. Research limitations/implications – The survey data employed do not include information on hours worked. In order to partially control for this, the analysis of wages is limited to employee wages excluding the self-employed. Practical implications – Explanations of why Roma fare so badly tend to fall into one of two camps: the “low education” and the “discrimination” schools. The analysis suggests that both of these explanations have some basis in fact. Moreover, a direct implication of the lower absolute returns to education accruing to Roma is that their lower educational participation is, at least in part, due to rational economic calculus. Consequently, policy needs to address both low educational participation and labour market discrimination contemporaneously. Originality/value – This is the first paper to attempt to econometrically distinguish between discrimination and educational explanations of Roma disadvantage in the labour market in Central and Eastern Europe. The survey data employed are unique and appropriate for the task. Unusually for analyses dealing with returns to education, the LIML econometric approach employed controls for both endogenous schooling and two sources of sample selection bias.

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Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

Volume (Year): 31 (2010)
Issue (Month): 2 ( May)
Pages: 163-187

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Handle: RePEc:eme:ijmpps:v:31:y:2010:i:2:p:163-187
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  1. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
  2. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  3. Thomas N. Daymonti & Paul J. Andrisani, 1984. "Job Preferences, College Major, and the Gender Gap in Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 408-428.
  4. Dena Ringold & Mitchell A. Orenstein & Erika Wilkens, 2005. "Roma in an Expanding Europe : Breaking the Poverty Cycle," World Bank Publications, The World Bank, number 14869.
  5. David Roodman, 2009. "Estimating Fully Observed Recursive Mixed-Process Models with cmp," Working Papers 168, Center for Global Development.
  6. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
  7. Thomas Bauer & Mathias Sinning, 2008. "An extension of the Blinder–Oaxaca decomposition to nonlinear models," AStA Advances in Statistical Analysis, Springer, vol. 92(2), pages 197-206, May.
  8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  9. Ronald Oaxaca, 1971. "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
  10. Florence Jaumotte, 2003. "Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries," OECD Economics Department Working Papers 376, OECD Publishing.
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