Within the cracks of the cosmic race: Income inequalities by race and ethnicity in Latin America

Abstract

While a considerable body of literature has studied ethnic inequalities and discrimination in Latin America, it is only in recent years that a growing number of studies examine income inequalities by race, defined as a skin color gradation. Furthermore, most research equates ethnic self-identification with race, leading to confusion on the root of the discrimination. Hardly any studies have addressed ethnicity and race as separate but intertwined characteristics to examine income disparities. It is crucial to address this scarcity to properly comprehend the effect miscegenation narratives have had in the region and the current state of wage inequalities. Hence, in this paper, I employ data from the Americas Barometer to investigate race and ethnicity income gaps in 17 Latin American countries. To do so, I applied non-linear regressions and decomposition methods, which allowed me to (i) separate the observable and non-observable factors of the income gap and (ii) decompose them by race and ethnicity and look at their intersection. In addition to the principal analyses, I conducted a series of robustness checks to evaluate the results’ consistency and perform heterogeneity analysis to examine income inequalities per country. The results show substantial differences in the average income of the different ethnic and racial groups, mainly driven by differences in observable characteristics like years of education and employment status. In addition, the heterogeneity analyses indicate that ethnic and racial disparities vary across Latin America and can be explained partially by unobserved variables like discrimination. Overall, the results suggest that skin color and ethnic self-identification should be accounted for simultaneously when evaluating inequality.