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

44 Pages Posted: 20 Nov 2015

See all articles by Peter McHenry

Peter McHenry

College of William and Mary

Melissa McInerney

College of William and Mary

Date Written: March 18, 2015

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.

Keywords: Hispanic-white wage disparities, Cost of living differentials, Immigrant and non-immigrant Hispanics, NLSY

JEL Classification: J31, J70, R23

Suggested Citation

McHenry, Peter and McInerney, Melissa, Estimating Hispanic-White Wage Gaps Among Women: The Importance of Controlling for Cost of Living (March 18, 2015). Available at SSRN: https://ssrn.com/abstract=2692630 or http://dx.doi.org/10.2139/ssrn.2692630

Peter McHenry

College of William and Mary ( email )

United States

Melissa McInerney (Contact Author)

College of William and Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

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