On the Cost of Ethnicity An Empirical Analysis of Relative Wages of Hispanics in the United States

This paper examines the labor market outcomes of Hispanic male and female workers using Public Use Microdata Samples from the 1990 Census of Population. Multivariate regression analysis is applied to estimate wage equations, correcting for selectivity bias, for Hispanic main national-origin groups and non-Hispanic blacks and whites. A detailed breakdown of the wage differential between each Hispanic group and non-Hispanic whites is provided. Results indicate that Hispanics earn lower wages than non-Hispanic whites, but the extent of wage differences varies by national-origin group and gender. On average, Cubans and Puerto Ricans fare better than Mexicans and Central and South Americans. Parameter estimates show that both human capital and job-related and labor market characteristics are significant determinants of Hispanic wages, though the estimated returns to observed characteristics differ by nationality among Hispanics. Low educational and occupational attainment explains most of the wage gap for Cuban and Puerto Rican men and Mexican women. For the remaining Hispanic groups, particularly Hispanic women, there exists considerable evidence of unexplained discrimination relative to non-Hispanic whites. Policy implications of these findings are discussed. Thesis Supervisor: Aixa N. Cintron Title: Assistant Professor of Urban Studies and Planning