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LATIN AMERICA: Big Gender, Ethnic Gaps in Wages Found

Jim Lobe

WASHINGTON, Oct 12 2009 (IPS) - Indigenous people, descendants of Africans, and women in Latin America earn significantly less money than their predominantly white male peers of similar age and education levels, according to a new study released here Monday by the Inter-American Development Bank (IDB).

The gaps tend to be more pronounced in private sector jobs, according to the 76-page study, which was based on a major review of household survey data from 18 nations throughout the region over the past 15 years.

Entitled “New Century, Old Disparities”, the report, an IDB “Working Paper,” found that women with the same age and education achievement on average earn 17 percent less than their male counterparts.

For minorities – defined as people who described themselves in household surveys as indigenous, black or brown, or speakers of an indigenous language – the gap was even greater: an average of 28 percent.

“Policies aimed at reducing these inequalities are still lacking,” said Hugo Nopo, the study’s lead author and an IDB economist. “This is more than just a moral necessity. It is an essential strategy to reduce poverty in the region.”

The study compared wages among individuals with the same demographic and job-related characteristics – including age, level of education, place of residence, and type of employment.

In addition to Bolivia and Brazil, the country studies included Argentina, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Peru, Paraguay, Uruguay, Venezuela, and the five Spanish-speaking countries of Central America.

The study used a new methodology designed to better measure the role of individual characteristics and experience in explaining wage gaps than previous studies in an effort to isolate specific factors that may contribute to the disparities.

Nopo claimed that previous methodologies “tended to exaggerate the role of discrimination and other non-specified characteristics in explaining wage differentials”. On average, a fifth of the total gender wage gap cannot be explained on the differences in observable individual or job characteristics.

On gender wage gaps, the study found that men earn more than women at any age, for each level of education, in both large and small enterprises, and regardless of whether they were self-employed, employees, or employers themselves.

The only exception was found in rural areas, where females tend to earn on average the same as their male peers.

The gender gap varied widely among countries. Men were found to earn 30 percent more than comparably aged and educated women in Brazil and 26 percent in Uruguay. In Bolivia and Guatemala, on the other hand, the differences were negligible.

The smallest gender wage gap was found among younger people with a university degree, a finding that may be explained by the tendency of more educated women to find positions in larger companies where managers enjoy less discretion in setting wages.

Indeed, gaps were found to be lower among workers employed in the formal economy and higher among those working in small companies or in the informal economy.

The biggest gaps were found among lower-income workers who did not finish high school and were living in rural areas.

The survey also found that gender age gaps increase with age, a tendency that could be explained at least in part by the caretaking role assumed by women who have children, according to Nopo, who noted that women are more likely to be forced out of the labour market after childbirth.

“Policies allowing them to return to work, such as a better supply of child care services, can contribute to reduce wage differentials,” he said.

On ethnic wage gaps, the study covered only seven of the 18 countries because they were the only ones where the household surveys obtained ethnic information. The seven included Bolivia, Brazil, Chile, Ecuador, Guatemala, Paraguay and Peru.

On average, non-minorities earned nearly 40 percent more than the indigenous populations – who constitute demographic majorities in several of the countries – and Afro-Latinos. But, when age, gender, and level of education were taken into account, the gap fell to 28 percent.

The largest gaps were found in Brazil (30 percent); Guatemala (24 percent), and Paraguay (22 percent). The smallest gaps were found in Ecuador (four percent) and Chile (11 percent).

The biggest ethnic gaps were also found among those at the extremes of income distribution: those earning the highest and lowest wages. It also found the biggest gaps among males, older workers, and rural dwellers.

By isolating specific factors that may have contributed to the gaps, the study found that about one half of the wage gap between whites and minorities could be explained by educational level and a combination of other individual and job characteristics fulfilled by whites but not by minorities.

“Ethnic wage gaps are linked to occupational segregation, as minorities are under-represented in employer occupations, where wages are higher,” according to Nopo. “As in gender gaps, it is difficult to find minorities, for example, employed with the typical profile of a CEO.”

While social and development policies have encouraged expanded enrolment and keeping children in school, the findings raised questions about both the quality and relevance of education indigenous populations were receiving, the report suggested.

“The poor quality of education could help explain why poor minorities get a lower return on their schooling,” Nopo said.

In addition to expanding childcare facilities, the study suggested the adoption of other policies that could help minorities overcome existing obstacles, including greater investments in public education and affirmative-action education and job-training programmes for minorities.

The study also called for special attention to be given to indigenous girls, who face discrimination both as females and as members of minority groups.

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