New Century, Old Disparities : Gender and Ethnic Earnings Gaps in Latin America and the Caribbean

After a sustained economic growth period at the end of the last century and the beginning of this one, Latin America still faces high inequality and lower well-being indicators among women, afro-descendants, and indigenous peoples. This is a period in which the world and particularly Latin America has experienced important changes regarding the role of women and men. Marriage, education and work decisions have evolved and, as a result, women’s visibility at home, at school, in the labor markets and in society have evolved as well. But there are still, however, important challenges in the labor markets. Earnings differentials as well as occupational and hierarchical segregation are commonly accepted as the norm in the region’s labor markets. For the diverse racial and ethnic groups the situation has been less auspicious than for women. Statistics reveal that traditionally excluded ethnic groups have worse poverty and income outcomes, reflected in issues such as restricted access to public services, poorer health conditions, lack of political representation, confinement into low productivity activities and prevalent discrimination. The evidence points that in Latin America, a racially and ethnically diverse region, the benefits of the recent progress have not reached equally indigenous peoples and Afro-descendants. This pattern can be traced to lower human capital endowments, manifested in poorer educational performance and fewer years of job experience. In this way, these groups have been less able to benefit from the economic opportunities generated within this prosperous period. This book is about gender and ethnic differences in labor markets earnings. It revolves around the question: to what extent the gender (ethnic) differences in earnings are a result of gender (ethnic) differences in observable individuals’ characteristics that the labor markets reward? Such question is answered with a novel methodological approach based on matching comparisons, resembling the Oaxaca Blinder (OB) decompositions, extending their scope. What would the distribution of females’ and males’ earnings be if they had equal levels of education, if they worked the same quantity of hours per week, if they worked in the same kind of formal jobs, or in firms of the same size? What would happen with the earnings gap, for instance, if men and women had the same occupations or were distributed equally through economic sectors? Further on, what would happen if all men and women in the labor markets were equally distributed along all of these characteristics at the same time? The novelty of the methodology introduced in this book is that it allows us to create fictional labor markets where these counterfactuals are true. Furthermore, this book addresses not only the extent to which those differentials can be explained by individuals’ characteristics, but also how have these gaps evolved during the last two decades. In this way, it allows the discussion of policy options for these pressing issues in the region.

Despite sustained economic growth at the end of the 20th and the beginning of the 21st century, Latin America and the Caribbean still faces high inequality and weak indicators of well-being among certain population groups. Women, people of African ancestry, and indigenous peoples are often at the bottom of the income distribution. The share of female-headed households rose in the past 20 years. By the beginning of the 1990s, women headed 1.2 percent of complete households (households in which both husband and wife are present) and 79.8 percent of single- head households. This book presents a regional overview of gender and ethnic disparities in labor earnings during this last turn of the century. Latin America and the Caribbean provide a rich environment for studying social inequality, because historical inequalities along gender and ethnic lines persist, despite positive indicators of economic development. The extent of inequality and its probable causes vary widely across the many countries in the region. The book adopts a sophisticated econometric methodology for measuring earnings gaps and applies it consistently across and within countries to measure gender and racial or ethnic differences. The analysis includes a dynamic dimension that sheds light on the evolution of earnings gaps over time. The book offers important insights on economic and political strategies that could be adopted to reduce inequality. The reduction of gender-based segregation in the workplace represents an area in which policy interventions can improve the efficiency of labor markets. Determining whether addressing occupational rather than hierarchical segregation is more effective is one of the areas of policy design to which this book aims to make a contribution. Latin America and the Caribbean is also a racially and ethnically diverse region, with some 400 ethnic groups.

Foreword / by Ronald Oaxaca Acknowledgements Overview Education : girls outpaced boys Some basics : the methodology and the data Gender earnings gaps in the region : more schooling but lower earnings The mostly unexplained gender earnings gap : Peru, 1997-2009 Is segregation at the workplace a culprit for earnings gaps? : Mexico, 1994-2004 Low female participation and high males : overtime : Chile, 1992-2009 The resilient wage gap : Colombia, 1994-2006 Equality promotion in the country with the highest earnings gaps of the region : brazil, 1996-2006 Gender wage gaps in a country with a large indigenous population : Ecuador, 2003-2007 Higher gender wage gaps among the poorest : Central American countries The understudied caribbean : Barbados and Jamaica Overlapping disadvantages : ethnicity and earnings gaps Efforts for equality promotion that start to show results : Brazil, 1996-2006 No good jobs and lower earnings : Ecuador, 2000-2007 Differentials for big minorities : Guatemala, 2000-2006 As a way of summarizing and outlining some policy options.