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Estimating Hispanic-White Wage Gaps Among Women: The Importance of Controlling for Cost of Living

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  • Peter McHenry
  • Melissa McInerney

Abstract

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. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Peter McHenry & Melissa McInerney, 2015. "Estimating Hispanic-White Wage Gaps Among Women: The Importance of Controlling for Cost of Living," Journal of Labor Research, Springer, vol. 36(3), pages 249-273, September.
    • Handle: RePEc:spr:jlabre:v:36:y:2015:i:3:p:249-273
    DOI: 10.1007/s12122-015-9210-3
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    More about this item

    Keywords

    Hispanic-white wage disparities; Local cost of living; J31; J70; R23;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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