Estimating Hispanic-White Wage Gaps Among Women: The Importance of Controlling for Cost of Living
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Despite concern regarding labor market discrimination against Hispanics, previously published estimates show that Hispanic women earn higher hourly wages than white women with similar observable characteristics. This estimated wage premium is likely biased upwards because of the omission of an important control variable: cost of living. We show that Hispanic women live in locations (e.g., cities) with higher costs of living than whites. After we account for cost of living, the estimated Hispanic-white wage differential for non-immigrant women falls by approximately two-thirds. As a result, we find no statistically significant difference in wages between Hispanic and white women in the NLSY97.
KeywordsHispanic-white wage disparities Local cost of living
JEL ClassificationJ31 J70 R23
The authors gratefully acknowledge support from a W.E. Upjohn Institute Early Career Research Grant. This research was conducted with restricted access to Bureau of Labor Statistics (BLS) data. The views expressed here do not necessarily reflect the views of the BLS. We thank Alison Courtney and Sarah Gault for excellent research assistance.
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