Explaining the Wage Differential between Mexican Americans and Whites

1
Explaining the Wage Differential between Mexican
Americans and Whites

• Travis Bray, Allan Oulate, Kathy Bañuelos and
  Mike von Guillleaume

2
1940 to 1970 The gap closes

• The gap between whites and Latinos narrows, but
  why?
• A shift from agriculture to better paying
  industry and service jobs

• Increases in Latino high school completion rates
• Dramatic decrease in discrimination, especially
  in the 1960s

3
Principle reasons for increased wage inequality
since 1970

• Widening of the gap between Latinos earning
  higher and lower incomes (a decline in the
  percentage of middle income earners)
• Widening of the gap between whites in high income
  groups and Latinos in lower income groups
• Increased difference between wages of immigrants
  vs. non-immigrants
• Human capital differences and wage discrimination

4
Explaining increasing inequality

• Discrimination against Latinos and minorities
• Human Capital differences (education and language
  barriers)
• Structural changes in labor market occupations
• Continued immigration

5
More on explaining increasing inequality

• The reversal in income inequality has been
  accompanied by a renewed polarization in the job
  structure of the U.S.
• Blacks and Latinos are still disproportionately
  employed in low income jobs
• Changes occurring in the employment structure for
  minorities and whites suggest a slowdown in the
  incorporation process

6
Even more on increasing inequality

• Among white males there has been a steady shift
  from middle to higher income jobs
• Among Latino males there was an expansion of
  middle and higher paying jobs in the 1960s, but
  this trend reversed in the 1980s

7
Alternative Explanations

• Wage inequality between White and Latino males is
  due to the difference in each groups
  characteristics not discrimination
• For Latino males 1960s 70s decrease in
  discrimination effect, rose in the 1980s
• For Latino females to White males the 1960s
  1970s ? in discrimination effect

8
The Characteristic Differences

• Human Capital was the most important in
  determining the inequality of wages
• Industry worked in has grown in importance in
  the 1980s 90s
• Sectoral shift for Latino Males from
  Manufacturing into lower paying construction.

9
The Immigration Issue

• Overall discrimination has been ?ing for native
  born and ?ing for immigrants, however immigrants
  are still more discriminated against
• This is due to increased youthfulness of the
  U.S.-Mexican labor force relative to whites and
  not from increased competition caused by influx
  of native born Mexicans

10
New vs. Old Immigrants

• The issue has been raised to account for the wage
  gap that exists
• There is evidence to suggest shrinking in low
  skill job market caused the difference between
  old and new immigrants

11
Directions for future policies

• Discrimination, poverty, and poor education are
  still prominent reasons for wage inequality,
  despite progress in these areas
• Why are the Latino high school dropout rates so
  high?
• Focus on helping the first generation immigrants
  get out of poverty