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Ethnicity and Earnings in Urban Peru

  • Nopo, Hugo

    ()

    (Inter-American Development Bank)

  • Saavedra, Jaime

    ()

    (World Bank)

  • Torero, Maximo

    ()

    (International Food Policy Research Institute)

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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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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  1. Nidardo, J. & Fortin, N. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Papers 93-94-15, California Irvine - School of Social Sciences.
  2. 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.
  3. 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.
  4. Nopo, Hugo, 2004. "Matching as a Tool to Decompose Wage Gaps," IZA Discussion Papers 981, Institute for the Study of Labor (IZA).
  5. Hugo Nopo, 2009. "The Gender Wage Gap in Peru 1986-2000: Evidence from a Matching Comparisons Approach," Research Department Publications 4618, Inter-American Development Bank, Research Department.
  6. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
  7. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
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