Unveiling the Cosmic Race: Racial Inequalities in Latin America

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March 2022
Paper author(s): 
L. Guillermo Woo-Mora
Poverty - Inequality - Aid Effectiveness

This paper uses skin tone and income information for over a hundred thousand individuals across 31 Latin American countries to study racial inequalities during the last decade. First, I estimate the welfare consequences of racial inequality. Subnational regions with higher income inequality between racial groups have worse economic development. Next, I provide evidence of a skin tone income premium. In an eleven-color palette, each darker shade in skin tone on average leads to a 3% decrease in income, with heterogeneity across countries. My analysis suggests racial discrimination is the main mechanism behind this income premium.


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