Ethnic Gaps in the Chilean Labor Market: Evidence from CASEN, 2000–2024

Abstract

This master thesis analyzes Indigenous–non-Indigenous gaps in the Chilean labor market along four complementary dimensions—employment, formality, monthly earnings, and hourly wages—using eleven pooled rounds of the CASEN survey spanning 2000 to 2024 (approximately 1.5 million observations). Conditional gaps are estimated through pooled and group-specific regressions; for the three outcomes observed only among employed workers, I correct for selection into employment following the Heckman (1979) two-step procedure. The resulting gaps are then decomposed following the Oaxaca–Blinder approach. Four main findings emerge. First, the magnitude of Indigenous disadvantage differs markedly across margins: the raw gap is 4.5 percentage points in employment, 7.0 percentage points in formality, 23.9% in monthly earnings, and 18.8% in hourly wages; the difference between the latter two implies that part of the monthly gap is mediated by differences in hours worked. Second, the conditional Indigenous coefficient is robust to the selection correction, and the unexplained share of the gap ranges from essentially nil in employment, to roughly two-fifths in formality, to about half in both remuneration outcomes. Third, education and potential labor market experience are two of the main individual-level contributors to the ecompositions, although their channels differ across outcomes. Fourth, the rural penalty is consistently larger in the Indigenous subsample across all outcomes. The results suggest that, over the 2000–2024 period as a whole, Indigenous disadvantage in Chile is less a matter of exclusion from employment than of inferior remuneration, lower access to contributory social protection, and lower returns to human capital.