Abstract
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.
Highlights
As Latvia has one of the largest shares of ethnic minorities in the European Union (EU), every and questions of possible discrimination towards nonLatvians are raised
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
We found that notable ethnic wage gap still exists in Latvia with ethnic minorities earning 10 % less than Latvians in 2015
Summary
As Latvia has one of the largest shares of ethnic minorities in the European Union (EU), every and questions of possible discrimination towards nonLatvians are raised. Should be aware that differences in wages between population groups can be caused by various reasons Differences in characteristics such as education attainment and experience in the labour market is one example. Majority of the wage gap can be explained by differences in characteristics and the unexplained part is rather small These results imply that in case of Latvia one should be cautious when interpreting the ethnic wage gap as discrimination. Both direct and indirect evidence point to the importance of state language proficiency, from policy perspective, strategies focusing on raising the Latvian language skills among non-Latvians could reduce both conditional and unconditional wage gaps.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
