Full Citation

Title: Decomposing the Wage Gap: Analysis of the Wage Gap Between Racial and Ethnic Minorities and Whites

Citation Type: Journal Article

Publication Year: 2015

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Abstract: In the US, income equality has been an issue discussed throughout the years. Some say the gap between the rich and the poor is steadily growing with racial and ethnic minorities disproportionately occupying the poorer categories. Empirical analysis of the Bureau of Labor Statistics March 2013 Current Population Survey (CPS) reveals that a statistically significant gap in hourly wages exists between Blacks and Hispanics in comparison to Whites. This paper statistically investigated the relationship between race and wages controlling for variables such as age, children, citizenship, education, gender, location type, and marital status. Blinder-Oaxaca Decomposition was used to further investigate which components contributed to the gap in income and how those components varied across Blacks and Hispanics in comparison to Whites. Results indicated that for Blacks, the pure group effect contributed more heavily towards the wage differential while for Hispanics, the endowment effect was the greatest contributor. This indicates that to tackle wage inequality a possible solution may be to diversify policy recommendations for both groups with an emphasis on policies that target systemic discrimination for Blacks and market-valued skills for Hispanics.

Url: http://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1116&context=ppr

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Authors: Kamara, Jennifer

Periodical (Full): Pepperdine Policy Review

Issue:

Volume: 8

Pages:

Data Collections: IPUMS CPS

Topics: Other, Race and Ethnicity

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