On the Endogeneity of Self-Declared Skin Color in Contemporary Brazil

Self-declared skin color in Brazil is often taken in econometric applications as being exogenous, even though a considerable body of research in the other social sciences has underscored its endogeneity. As such, econometric conclusions concerning discrimination in terms of labor market access or wages may be biased. The standard econometric response is, of course, to resort to an instrumental variables procedure in order to correct these biases. Heretofore, the endogeneity of skin color has never been adequately addressed in econometric terms, because admissible instrumental variables have not been available. This paper focuses on self-declared skin color and uses primary data that was specifically collected in order to implement a first-stage reduced form equation for self-declared skin color. I resort to a chromatic analysis to construct an objective measure of each individual's skin color, later called chromatic constraint, provides good instrumental variables, and the results highlight the links between self-declared skin color and individual characteristics such as occupational, educational and socio-economic status.