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Exclusion and Discrimination as Sources of Inter-Ethnic Inequality in Peru


  • Manuel Barrón



According to the 2003 National Household Survey, mean labour income for an indigenous worker is only 56% of that for a non-indigenous worker. Studies of ethnic discrimination in Peru’s labour markets generally find that discrimination is too low to explain inequalities of this magnitude. However, Sigma Theory (Figueroa 2003) predicts that social exclusion is a source of inter-ethnic inequality, and that has not been empirically tested. The primary aim of this paper is to fill this gap by estimating the extent to which exclusion and discrimination contribute to income inequality. Hurdle models are used to tackle down econometric endogeneity of years of schooling and truncation-at-zero of incomes. The results imply that exclusion plays a stronger role on inequality than discrimination: without exclusion, the Gini of labour income would decrease from 0.64 to 0.45, and without discrimination it would be reduced to 0.50.

Suggested Citation

  • Manuel Barrón, 2008. "Exclusion and Discrimination as Sources of Inter-Ethnic Inequality in Peru," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, issue 61, pages 51-80.
  • Handle: RePEc:pcp:pucrev:y:2008:i:61:p:51-80

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    References listed on IDEAS

    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. Granger, C. W. J. & Newbold, Paul, 1986. "Forecasting Economic Time Series," Elsevier Monographs, Elsevier, edition 2, number 9780122951831 edited by Shell, Karl.
    3. Adolfo Figueroa, 1991. "Transformación en la Agricultura de América Latina: Capitalismo y Campesinado," Capítulos de Libros PUCP / Chapters of PUCP books,in: La agricultura latinoamericana: crisis, transformaciones y perspectivas, edition 1 Fondo Editorial - Pontificia Universidad Católica del Perú.
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    Cited by:

    1. Juan Pablo Atal & Hugo R. Ñopo & Natalia Winder, 2009. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," IDB Publications (Working Papers) 1131, Inter-American Development Bank.

    More about this item


    inter-ethnic inequality; exclusion; hurdle models.;

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration


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