Racial Wage Differentials in Developed Countries

In many developed countries, racial and ethnic minorities are paid, on average, less than the native white majority. While racial wage differentials are partly the result of immigration, they also persist for racial minorities of second and further generations. Eliminating racial wage differentials and promoting equal opportunities among citizens with different racial backgrounds is an important social policy goal since inequalities resulting from differences in opportunities lead to a waste of talent and of resources.

Since minority groups segregate in poorly paid occupations and lack career progression, we may have racial wage differentials even in the absence of direct wage discrimination.  Policy should be based on a better understanding of what characteristics and situations prevent racial minorities from moving into better jobs; discrimination and unconscious bias within and outside the workplace may be part of the reason.

Longhi S. (2020) Racial Wage Differentials in Developed Countries, IZA World of Labor, 2020: 365.v2