Can Differences in Characteristics Explain Ethnic Wage Gap in Latvia?

Open access

Abstract

We used anonymized micro data from Labour Force Survey to estimate the ethnic wage gap in Latvia and find the factors that explain it. We found that a notable ethnic wage gap still exists in Latvia with non-Latvians earning 10 % less than Latvians in 2015. The results of Oaxaca-Ransom decomposition show that approximately two thirds of the ethnic wage gap are explained by differences in characteristics with the most important effects in favour of Latvians caused by segregation in better paying occupational groups, having Latvian citizenship and better education (higher education levels and more favourable segregation by education fields). This was partly offset by favourable segregation in sectors for non-Latvians. Quantile regressions show that ethnic wage gap is statistically significant in all deciles of wage distribution.

Albrecht, J., van Vuuren, A., & Vroman, S. (2015). The Back-White Wage Gap Among Young Women in 1990 vs. 2011: The Role of Selection and Educational Attainment. Labour Economics, 33, 66-71. https://doi.org/10.1016/j.labeco.2015.02.006

Blinder, A. S. (1973). Wage Discrimination: Reduced Form and Structural Estimates. The Journal of Human Resources, 8(4), 436-455. https://doi.org/10.2307/144855

Chernozhukov, V., Fernández‐Val, I., & Melly, B. (2009). Inference on Counterfactual Distributions. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1235529

Fadejeva, L., & Krasnopjorovs, O. (2015). Labour Market Adjustment During 2008-2013 in Latvia: Firm Level Evidence. Retrieved from https://www.macroeconomics.lv/sites/default/files/wp_2-2015_en.pdf

Fortin, N., Lemieux, T., & Firpo, S. (2011). Decomposition Methods in Economics. Handbook of Labor Economics (4th ed.). Elsevier North Holland, 1-102. https://doi.org/10.1016/S0169-7218(11)00407-2

Hazans, M. (2007). Coping with Growth and Emigration: Latvian Labor Market Before and After EU Accession. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.971198

Jann, B. (2008). The Blinder-Oaxaca Decomposition for Linear Regression Models. The Stata Journal, 8(4), 453-479. Retrieved from http://www.stata-journal.com/sjpdf.html?articlenum=st0151

Kahanec, M., & Zaiceva, A. (2008). Labour Market Outcomes of Immigrants and Non-Citizens in the EU: An East-West Comparison. IZA DP No. 3420. Retrieved from http://repec.iza.org/dp3420.pdf

Leping, K.-O., & Toomet, O. (2008). Emerging Ethnic Wage Gap: Estonia During Political and Economic Transition. Journal of Comparative Economics, 36(4), 599-619. https://doi.org/10.1016/j.jce.2008.08.002

Melly, B. (2005). Decomposition of differences in distribution using quantile regression. Labour Economics, 12(4), 577-590. https://doi.org/10.1016/j.labeco.2005.05.006

Oaxaca, R. (1973). Male-Female Wage Differentials in Urban Labor Markets. International Economic Review, 14(3), 693-709. https://doi.org/10.2307/2525981

Oaxaca, R. L., & Ransom, M. R. (1994). On Discrimination and the Decomposition of Wage Differentials. Journal of Econometrics, 61(1), 5-21. https://doi.org/10.1016/0304-4076(94)90074-4

Vilerts, K., Krasnopjorovs, O., & Brēķis, E. (2015). Does Education Affect Wages During and After Economic Crisis? Evidence From Latvia (2006-2012). Retrieved from https://www.macroeconomics.lv/sites/default/files/wp_3-2015_en_f.pdf

DAIF. (2006). Eiropas Savienības struktūrfondu Nacionālā programma “Darba tirgus pētījumi”. Projekts Darba algas un to ietekmējošie faktori (Labklājības ministrijas pētījums, Nr. VPD1/ESF/NVA/04/NP/3.1.5.1./0001/0003). Rīga, Latvija. 214 p. Retrieved February 8, 2015, from http://www.lm.gov.lv/upload/darba_tirgus/darba_tirgus/petijumi/darba_algas_faktori.pdf (in Latvian)

LM. (2007). Eiropas Savienības struktūrfondu Nacionālā programma “Darba tirgus pētījumi”. Projekts Labklājības ministrijas pētījumi (Labklājības ministrijas pētījums, Nr. VPD1/ESF/NVA/ 04/NP/3.1.5.1./0001/0003). Rīga, Latvija. 237 p. Retrieved December 21, 2016, from http://www.lm.gov.lv/upload/darba_tirgus/darba_tirgus/petijumi/regionu_specifiskas_problemas.pdf (in Latvian)

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 213 199 11
PDF Downloads 81 76 6