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The Progressive Economics Forum

Race and Earnings and the Census

I’ve blogged previously on this topic but it is worth revisiting in light of the Census debate.  The gold standard for looking at racial pay gaps is analysis of differences in earnings between Canadian born whites and visible minorities since this excludes differences between immigrants and non immigrants (most importantly country of education and work experience.) This is really only possible using long form Census data since the sub populations of many Canadian born visible minority groups are quite small.

A study by Feng Hou and Simon Coulombe of Statistics Canada – ” Earnings Gaps for Canadian-Born Visible Minorities in the Public and Private Sectors” published in Canadian Public Policy (March, 2010) confirms that significant pay gaps in terms of annual earnings exist for racialized minorities which cannot be readily explained away (not that this will stop many economists from muttering incoherently about “unobserved heterogeneity”, nor likely give pause to Conservative politicians bent on eliminating the factual basis for claims that racial discrimination demonstrably exists.)

The study looks at earnings gaps between Canadian born whites and Canadian born visible minorities in the public and private sectors, and by gender. It calculates an adjusted gap which controls for other factors captured by the Census, notably level of education, years of potential work experience, official language ability, and detailed occupation, and employment status (full time or not.)

The racial pay gap thus calculated is largest –  8.5% less  for visible minority men in the private sector (about half of the “raw” difference before controls are added.) The gap is just 1.9% for men in the public sector. For women, the pay gap is 3.8% in the private sector and 2.9% in the public sector. The difference between the pay gap within the private and public sectors seems to be the result of employment equity policies operating in the latter (and perhaps unionization though there is no such variable in the Census.)

For private sector men, the adjusted racial pay gap is largest for blacks (15.7%) but still significant for South Asians (5.8%) and Chinese Canadians (5.2%.)

Will we ever see data for 2011? Will racial pay gaps narrow or widen as the Canadian born visible “minority” population grows to majority status among younger age groups in our largest cities? I don’t know, but I think it is important that we continue to get the data and the expert analysis from Statistics Canada.

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