Working with Co-Ethnics: Earnings Penalties for Latino Immigrants at Latino Jobsites

Abstract

We demonstrate that Mexicans and Central Americans legalized through the 1986 Immigration Reform and Control Act suffer a substantial pay penalty for working at jobsites where co-ethnics predominate, above and beyond the influences of low levels of human capital, employment in informal or secondary sector jobs, or in less-skilled occupations. Utilizing the 1992 Legalized Population Survey, we regress wages on individual, job, and occupational characteristics. These models demonstrate a sizable, negative effect of employment in a Latino ghetto, which outweighs the effects of many years of education, labor force experience, or job tenure. Most of the respondents work at jobsites saturated with co-ethnics, and such segregation puts them at a pronounced monetary disadvantage. We argue that policies to improve immigrant Latinos' labor market outcomes must move beyond prescriptions for enhancing workers' human capital to address structural factors that contribute to underpayment at Latino jobsites.