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Boundaries of Clan and Color

Economic disparity between ethnic and racial groups is a ubiquitous and


pervasive phenomenon internationally. Gaps between groups encompass
employment, wage, occupational status and wealth differentials. Virtually
every nation includes a group whose material well-being is sharply depressed in
comparison with another, socially dominant, group.
This collection is a cross-national, comparative investigation of the patterns
and dynamics of inter-group economic inequality. A wide range of respected
experts discuss issues such as:

an array of groups from the Burakumin in Japan to the scheduled castes


and tribes in India
policy attempts to remedy inter-group inequality
race and labor market outcomes in Brazil.

Under the editorship of William Darity, Jr. and Ashwini Deshpande this
collection forms an important book that will be of interest to students and
academics involved in racial studies, the economics of discrimination and
labor economics as well as being very useful to policy makers the world over.
William Darity, Jr. is Cary C. Boshamer Professor of Economics and Director
of the Institute of African American Research at the University of North
Carolina at Chapel Hill as well as Research Professor of Public Policy Studies
at Duke University.
Ashwini Deshpande is Assistant Professor of Economics at the Delhi School
of Economics, University of Delhi.

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Boundaries of Clan and Color
Transnational comparisons of inter-group disparity
Edited by William Darity, Jr. and Ashwini Deshpande

Boundaries of Clan and Color


Transnational comparisons of
inter-group disparity

Edited by
William Darity, Jr. and
Ashwini Deshpande

To William A. Darity, Sr. and Evangeline Royal Darity,


my parents, who consistently worked to widen the
boundaries facing my sister and myself
William Darity, Jr.

Dedicated to the memory of my grandparents,


Dr Purushottam Narahar and Ashatai Deshpande,
who questioned boundaries and rejected them
Ashwini Deshpande

First published 2003


by Routledge
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Simultaneously published in the USA and Canada
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2003 editorial matter and selection William Darity, Jr. and Ashwini
Deshpande; individual chapters, the contributors
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Boundaries of Clan and Color : transnational comparisons of inter-group disparity / [edited
by] William Darity, Jr. & Ashwini Deshpande.
p. cm. (Advances in social economics)
Includes bibliographical references and index.
1. Income distributionCase studies. 2. EqualityEconomic aspectsCase studies. 3.
Ethnic groupsEconomic conditionsCase studies. 4. RaceEconomic aspectsCase
studies. I. Darity, William A., 1953 II. Deshpande, Ashwini, 1965 III. Series.
HC79 .I5B665 2003
331.6dc21

2002037066

ISBN 0-203-98771-3 Master e-book ISBN

ISBN 0-415-27395-1 (Print Edition)

Contents

List of illustrations
Notes on contributors
Acknowledgments
1

Boundaries of clan and color: an introduction

vii
ix
xi
1

ASHWINI DESHPANDE AND WILLIAM DARITY, JR.

Race, gender and regional labor market inequalities in


Brazil

14

PEGGY A. LOVELL

Earnings differentials among ethnic groups in Canada:


a review of the research

27

MORTON A. STELCNER

Understanding recent empirical evidence on race and labor


market outcomes in the USA

52

PATRICK L. MASON

If not reconciliation, then what? Race and the stolen


generation in Australia

70

SAMUEL L. MYERS, JR.

Multiracialism and meritocracy: Singapores approach to


race and inequality

93

R. QUINN MOORE

Recasting economic inequality


ASHWINI DESHPANDE

112

vi

Contents

The mobility of Japans Burakumin: militant advocacy and


government response

130

JACOB MEERMAN

Malaysias New Economic Policy: has it been a success?

152

FARIDAH JAMALUDIN

Index

175

Illustrations

Figures
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9

Aboriginal and Torres Strait Islander population in Australia,


197196
Percentage of Australians unemployed, aged 15 and over,
197191
Percentage of Australians not in the labor force, aged 15
and over, 197191
Ratio of Aboriginal to total percentage unemployed, 197191
Indigenous to non-Indigenous income ratios, 1980 and 1990
Indigenous to non-Indigenous income ratios, Northern
Territory, 1991 and 1996
Is acknowledgment of prior wrongs a necessary condition for
reconciliation?
Is an official apology required for reconciliation?
Is compensation for prior wrongs required for reconciliation?

73
74
75
76
76
77
81
82
82

Tables
1.1
2.1
2.2

Ranking of countries by selected indicators, 2000


Regional distribution of the population by race, Brazil, 18901991
Selected indicators by color and sex, workers aged 1864, urban
So Paulo and Baha, 1991
2.3 Occupational distribution by color and sex, workers aged
1864, urban So Paulo and Baha, 1991
2.4 Average monthly wage by color and sex, workers aged 1864,
urban So Paulo and Baha, 1991
2.5 Average monthly wage by years of completed schooling, color
and sex, workers aged 1864, urban So Paulo and Baha, 1991
2.6 Decomposition of average wage differentials by color and sex,
workers aged 1864, urban So Paulo and Baha, 1980, 1991
3.1A Population by ethnic origins for selected years, Canada,
18711951

3
16
18
19
20
21
23
29

viii Illustrations
3. lB Population by ethnic origins for selected years, Canada,
18711951
3. 1C Percentage distribution, 196191
3.1D Distribution (000), 196191
3A.1 Ethnic origins, definitions
4.1 Probability that a worker is offered an above-average wage
4.2 Duncan Index of occupational status for African American men,
18801990
6.1 Household monthly income in Singapore dollars and ratio to
Chinese monthly income by race, 1980 and 1990
6.2 Household type, household size, and household ownership by
race, 1980 and 1990
6.3 Streaming exam pass rates by race, 1987, 1990, and 1993
8.1 Educational achievement, Buraku population and all-Japan,
1976
8.2 Selected survey results, Burakumin compared to total
population, 1993
8.3 Highest level of education attained by Dowa-district Burakumin
(1993) and total population (1990)
8.4 Highest level of education attained by Dowa-district Burakumin
(1993) and all-Japan (1990), by age groups
9.1 Race, poverty, and family income
9.2 Incidence of poverty, 195787
9.3 Peninsular Malaysia: poverty levels according to urbanrura1
areas, 1970, 1976, 1984
9.4 Peninsular Malaysia: Gini coefficients, 197087
9.5 Ownership of share capital in limited companies, 197090
9.6 Peninsular Malaysia: average monthly household income
according to ethnic groupings, 1979 and 1984
9.7 Poverty rate as a percentage of total households, 1995
9.8 Annual growth rate of share capital ownership of limited
companies, 1990 and 1995
9.9 Racial composition of University students, 19667 and 1985
9.10 Malay median income as a percentage of Chinese median
income, 197084

30
32
33
46
59
63
95
101
103
134
135
135
135
154
157
158
159
160
160
162
163
165
167

Notes on contributors

William Darity, Jr. is the Cary C. Boshamer Professor of Economics at the


University of North Carolina at Chapel Hill and Director of the Institute of
African American Research. His research interests include racial and
ethnic economic inequality, NorthSouth models of trade and growth,
interpreting Keynes, the economics of the Atlantic slave trade and the
socialpsychological effects of exposure to unemployment. He has published
over 125 articles in professional journals and authored or edited seven
books. His most recent book, coauthored with Samuel Myers, Jr. is
Persistent Disparity: Racial Economic Inequality in the United States Since
1945 (1998). His avocations include playing blues harmonica, reading
science fiction, and coaching youth sports in Durham, NC.
Ashwini Deshpande is Assistant Professor of Economics at the Delhi School
of Economics, University of Delhi. Her research interests include international debt and capital flows, economics of discrimination and inequality
and inter-group disparity, with special reference to caste and gender. She
has published articles in several leading professional journals.
Faridah Jamaludin earned her undergraduate degree from the University of
Edinburgh in 1999 and subsequently did postgraduate study at the University of London. During the 19978 academic year she was an exchange
student at the University of North Carolina at Chapel Hill where she first
became engaged in comparative research on inter-group disparity across
countries, which led, in turn, to her detailed investigation of racialethnic
economic differences in her native Malaysia.
Peggy A. Lovell is an Associate Professor of Sociology and Latin American
Studies at the University of Pittsburgh. She has conducted fieldwork in
Mexico and Brazil and previously taught at the Centro de Desenvolvimento
e Planejamento Regional, Federal University of Minas Gerais, Belo
Horizonte, Brazil. She has published widely on issues of race and gender
inequality in the Brazilian labor market. Her current research includes a
comparative study of women in Brazil and the USA and a longitudinal
study of social change and inequality in Brazil.
Patrick L. Mason is Associate Professor of Economics at Florida State
University. His areas of interest include racial inequality, educational
attainment, income distribution, unemployment, economics of identity,
family environment and socio-economic well-being and transitions in family
structure and public policy. He has published a large number of professional

x Notes on contributors
journal articles, book chapters in edited volumes and professional studies.
He is currently working on a manuscript entitled Reproducing Inequality:
Family, Education, and Persistent Racial Discrimination. Other books
include African Americans, Labor, and Society: Organizing for a New Agenda
and Race, Markets, and Social Outcomes (co-edited with Rhonda Williams).
Jacob Meerman has had a career in development with the World Bank,
USAID and the Harvard Institute for International Development. He has
done extensive work in rural development of Africa and evaluation of Bank
programs in agricultural structural adjustment. His earlier experience
includes work in Latin America and Southeast Asia. He has been Adjunct
Professor and Visiting Scholar at Johns Hopkins University, School of
Advanced International Studies. His current research is on the economic
mobility of four low-status minorities. He is the author of Public Expenditures in Malaysia: Who Benefits and Why (Oxford University Press, 1979),
Reforming Agriculture, the World Bank Goes to Market (World Bank, 1996);
and one of the authors of the Berg Report on Accelerated Development
in Africa (World Bank, 1981).
R. Quinn Moore is a doctoral candidate in the Department of Economics
at the University of Michigan. His research on race and inequality in
Singapore was conducted at the National University of Singapore with a
Fulbright Graduate Research Grant.
Samuel L. Myers, Jr. is the Roy Wilkins Professor of Human Relations and
Social Justice and Director of the Roy Wilkins Center of Human Relations
and Social Justice at the Hubert H. Humphrey Institute of Public Affairs,
University of Minnesota. Myers has pioneered the use of applied econometric techniques to examine racial disparities in crime, credit markets,
education, mortgage lending, and employment. A graduate of Morgan
State University, he received his PhD in economics from the Massachusetts
Institute of Technology. He is the past president of the Association for
Public Policy Analysis and Management (APPAM). Myers has published
seven books and more than 100 articles in peer review journals, essays and
book chapters.
Morton A. Stelcner (19432000) was a Full Professor of Economics at
Concordia University, Montreal, Quebec. He earned his PhD in economics
from the Maxwell School, Syracuse University. His research interests
included: labor supply of married women, gender earnings differences, and
earnings disparities among Canadian ethnic/linguistic groups. His professional career included long-term appointments with the World Bank and
consultancy positions with the Canadian International Development
Agency. His research has also addressed labor market issues in Brazil,
Chile, the Cte dIvoire, Cyprus, Peru, and Turkey. His publications
include articles in reputed journals in economics and sociology, as well
chapters in books and reports.

Acknowledgments

We are grateful to John Davis, Editor, Review of Social Economy, for inviting
us to edit the special issue on cross-national comparisons of inter-group
disparity. The idea for this volume emerged out of that issue and would not
have seen the light of day without his encouragement. Between the appearance of the 2000 special issue and this volume, we lost a dear colleague and
one of the contributors to this volume, Morton Stelcner. We will miss his
humor and his unflagging commitment to intellectual honesty and social
justice. William Darity, Jr. would like to thank Kirsten, Aden, and William, his
immediate family, who constantly prod and challenge him to think rigorously
about the impact of constructions of race and ethnicity on their daily lives. He
also would like to thank his secretary, Sarah Mason, who has worked with him
in friendship for twenty years, and who has always had the courage to bypass
the conventional boundaries established in the American South. Ashwini
Deshpande would like to thank her father, G. P. Deshpande, for comments on
the race versus caste debate and her family for putting up with erratic work
schedules.
An earlier version of Chapter 3 was presented at the Allied Social Science
Association meetings in New York in January 1999. The author is grateful to
Amanda Benchimol, Matthew Glick, Gwenn Hughes, Natasha Joyal, and
Alica Robb for their constructive criticisms and suggestions.
Every effort has been made to trace copyright holders for permission to
reproduce these chapters. Any omissions brought to our attention will be
remedied in future editions.
William Darity, Jr.
Ashwini Deshpande

Boundaries of clan and color


An introduction
Ashwini Deshpande and William Darity, Jr.

Inter-group economic inequality


This volume has evolved out of a special issue of the Review of Social Economy
that we edited in 2000.1 Our interest in understanding patterns of ethnic
economic inequality across countries prompted us to look for comparative
studies and it turns out there is a small but growing body of work (see Nesiah
1997; Darity 1998; Darity and Deshpande 2000; Darity and Nembhard
2000). Eight general findings have emerged from these studies (Table 1.1
summarizes some of these points for a selected group of countries with welldocumented inter-group disparity):
1

Countries with a lower general level of income inequality do not necessarily


display lower levels of inter-group inequality. For instance, both Brazil,
South Africa and Malaysia with high overall inequality levels on the one
hand, and Canada, India, Australia and Israel with low overall inequality
levels on the other have substantial inter-group inequality.
Inter-group disparity is persistent and significant in countries at all levels
of development, whether development is measured narrowly by per
capita income or more broadly by an index of well-being such as the
Human Development Index (HDI). Whether they are high-HDI
countries (0.8 and above) such as Australia, Canada, Croatia, Israel,
Japan, New Zealand, Singapore, Trinidad and Tobago, the UK, and the
USA, or medium-HDI countries (0.50.799) such as Belize, India,
Lebanon, Malaysia, South Africa, Sri Lanka, and Zimbabwe, or lowHDI countries (below 0.5) such as Rwanda, Ethiopia, and Eritrea: all
have significant inter-group disparities.
Greater gender equity is not generally associated with lower levels of
inter-group inequality. As Table 1.1 demonstrates, the selected group of
countries has very diverse ranks in the Gender-Related Development
Index (GDI), going from 5 for Canada to 135 for Rwanda. The Gender
Empowerment Measure (GEM) is another measure that captures aspects
of empowerment of women. There are gaps in the data series for the GEM,
but whatever data are available display the same diversity as the GDI.

2 Ashwini Deshpande and William Darity, Jr.


4

Higher rates of economic growth do not invariably close economic gaps


between racial and ethnic groups, nor does lower economic growth
inevitably widen the gap. Neither Malaysia, a country that experienced a
high average rate of growth between 1975 and 1995, nor South Africa, a
country that experienced a negative rate of growth over the same period,
demonstrated an inverse movement in the degree of intergroup disparity.
Inter-group division at sufficiently high levels of tension to produce civil
war conditions or genocidal violence is obviously inimical to economic
development, but the mere fact of inter-group economic inequality is not.
This is clear from the experience of the high-income, high-HDI countries
that have managed to achieve high levels of economic development
despite significant inter-group disparity.
In all countries where statistical investigations have been undertaken to
assess the presence of discrimination in employment markets, substantial
evidence of discriminatory losses in earnings and occupational status
against a subaltern group is detected. In societies where group distinctions are borne by phenotypical markers, such as color, as in the USA,
identifying members of a subaltern group, e.g. the black minority, may be
easier than in other countries, such as India, where there are multiple
groups subjected to subaltern status. For instance, if religion is used as the
group identifier, then there is evidence of discrimination against minority
religions such as Islam and Christianity. But if caste is used as a group
marker, then the focus shifts to disparity within Indias dominant religious
group (Hinduism), and there is evidence of discriminatory losses against
lower castes. This complicates the picture, but the overall statement
that subaltern groups face discriminatory losses in labour markets
remains valid.
The picture also is beset by complicating subtleties in the USA. By US
standards, although phenotype has never been as decisive as genotype
(the so-called one-drop rule: one drop of African blood makes you
black), American racial boundaries, seemingly based upon fixed and
absolute criteria in laws governing race, did not prevent many persons of
recent African ancestry from passing over to the white category if they
were sufficiently light-skinned. Some clusters of persons of recent African
ancestry simply declared themselves to be native American tribal groups,
rather than be classified as black.2 Others whose phenotypical attributes
would have allowed them to go for white have chosen to be identified as
black. Therefore, whereas charting racial identity in the USA may be
easier for the detached observer than charting caste identity in India, it is
not necessarily easy to do either. And it would probably be impossible for
the detached observer in Rwanda or Burundi to determine who is Hutu
and who is Tutsi. But black identity is unequivocally associated with lower
economic status in the USA, just as low-caste affiliation is unequivocally
associated with lower economic status in India.
Cross-national evidence does not indicate that employment discrimi-

Introduction

nation necessarily declines over time, even in strongly market-oriented


economies. Labor market studies in Brazil, the USA after 1975, Canada,
and even post-apartheid South Africa do not provide evidence of a consistent decline in measured discrimination against subaltern groups.
Adoption and implementation of remedies for inter-group disparity, such as
affirmative action programs, have not proven sufficient to close the gap
anywhere, but there is good evidence to suggest that the gaps would be
even wider in the absence of such programs. Consider, for instance, the
counter-example of Nepal, which is an official Hindu nation that has no
affirmative action for low castes. Here, the low castes and Muslims are
seriously under-represented in higher education and the upper end of the
employment spectrum. These minority groups do not have a middle class
comparable to India that has been created owing to affirmative action
policies in education and public employment.

Table 1.1 Ranking of countries by selected indicators, 2000


Country

HDI

GNP
per capita

GDI rank

GEM
rank

Gini
coefficient

Canada
Australia
United States
Japan
United Kingdom
Israel
Croatia
Trinidad and Tobago
Singapore
Malaysia
Brazil
Sri Lanka
South Africa
India
Belize
Lebanon
Zimbabwe
Rwanda
Ethiopia
Eritrea

High
High
High
High
High
High
High
High
High
Medium
Medium
Medium
Medium
Medium
Medium
Medium
Medium
Low
Low
Low

High
High
High
High
High
High
Middle
Middle
High
Middle
Middle
Middle
Middle
Low
Middle
Middle
Low
Low
Low
Low

5
1
6
11
10
22
43
45
24
54
64
70
88
105
58
69
107
135
142
133

7
10
11
32
16
22
33
21
23
43
n.a.
64
n.a.
n.a.
45
n.a.
n.a.
n.a.
n.a.
n.a.

31.5
35.2
40.8
24.8
36.8
38.1
29
40.3
n.a.
49.2
60.7
34.4
59.3
37.8
n.a.
n.a.
50.1
28.9
40
n.a.

Source: Human Development Report, 2002, various pages.


Notes
High-income = GNP per capita of $9,266 or more in 2000.
Middle-income = GNP per capita of $7569,265 in 2000.
Low-income = GNP per capita of $755 or less in 2000.
GDI = Gender-Related Development Index: a composite index measuring average achievement in the three basic dimensions captured in the HDI a long and healthy life, knowledge
and a decent standard of living adjusted to account for the inequalities between men and women.
GEM = a composite index measuring gender inequality in three basic dimensions of empowerment Economic participation and decision making, Political participation and Decision making
and power over economic resources.

4 Ashwini Deshpande and William Darity, Jr.


One phase of the comparative inquiry involves construction of and examination of international cross-section, cross-country macro-level data on a
variety of country characteristics and on group economic differences within
each country. A second phase of the comparative inquiry involves development of increasingly detailed and accurate accounts of intergroup disparity for
each country. We believe that both phases feed into each other to produce a
nuanced account of inter group disparity across countries. In the special issue
of the Review of Social Economy we addressed the second phase. Through this
volume, we hope to further strengthen that quest.

Why clan and color?


It would be in order, at this stage, to elaborate a little on the title of this
volume, Boundaries of clan and color. Group disparities are not based on
skin color in all parts of the world. In Western Europe and in the Americas,
particularly North America, skin color (and phenotype), or what is popularly
known as race, forms the basis of group disparities. Even though it is
established that there is greater variation in phenotype and appearance within
so-called races than between them, the concept of race has proved to be a
powerful tool that is used to keep the minorities in these societies segregated,
discriminated against and oppressed.3 In a country that celebrates its multiculturalism, Canadas use of the term visible minorities makes this distinction
explicit. Visible are those whose skin color is not white; the 1986 Employment
Equity Act designated the visible minorities and other groups such as women
and disabled persons as facing discrimination in the labor market.
As Chapter 3 by the late Morton Stelcner in this volume demonstrates, the
racial/ethnic differentiation picture in Canada is complex and the single
umbrella term of visible minorities does not capture the multifaceted nature
of discrimination in the labor market. However, the fact remains that skin
color or race forms a crucial group marker. Racism or color-based disparity
and discrimination in another big country of North America, the USA, is more
well-known internationally. Large parts of Europe, notably Western Europe,
and South America, exhibit similar color-based disparities, with racism being
a major economic and social problem.
However, not all ethnic disparities and conflicts are based on skin color.
Take, for instance, conflicts that have been particularly bloody and violent
such as those in Rwanda, Sri Lanka, Israel or the Ethiopian conflict that led to
the formation of Eritrea. In fact, in African countries where a group of
European descent is not involved, ethnic conflicts are between groups whose
identities are not based on skin color. Indeed, even inside Europe, the Balkan
crisis did not originate in race-based conflicts. In both Singapore and
Malaysia, the subject matter of Chapters 6 and 9 in this volume, inter-group
disparity is based on national origins. Thus, in non-color-based societies, the
conflicting groups are not defined on the basis of skin color or race but upon
other social categories religion, nationality or other ethnic groupings. In

Introduction

such societies skin color is considered more an individual attribute than a


group characteristic. Thus, it is entirely possible that in these societies individual distinctions in skin color are noticed or might be considered an attribute
of beauty, but the defining character of social groups is not their common
skin color.
Of course, in such societies, there are internally understood or recognized
markers to distinguish members of racial or ethnic groups. These markers may
not always provide correct signals, but they are the operating guidelines in
their particular social context. Rwandans and Burundians generally will claim
they can tell who is what based on various social markers. In Japan the
Burakumin typically were identified by their mode of speaking/dress, since
they lived for many years in segregated communities. Jacob Meerman, in
Chapter 8 in this volume, suggests that with the dispersal of the Burakumin
ghettos Japan may experience a dissolution of the Buraku identity. That may
be true, but will it also mean that the inequalities besetting persons of Buraku
ancestry, people scarred by Japans history of degrading them, will disappear
while they still carry the legacy of deprivation? These questions point to the
complexity of this issue.
India is a compelling country in that the definitions of group identity are
multifaceted, as we have already seen. Thus, to talk in terms of a single
majority or a dominant group that is in conflict with one or several subaltern
groups is not very meaningful in understanding the totality of group divisions
in the country. To go back to the two examples that we referred to earlier,
within Hinduism caste is an important group identifier (Chapter 7 in this
volume is focused on inter-caste disparity). In this context, the subaltern
groups would be the low castes. However, as we go to press, India is still
emerging from the aftermath of one of the worst instances of communal
carnage in its history, where forces claiming to represent the majority religion
(Hinduism) went on a rampage against Muslims, a small but significant
minority. Here, the majority comprises all Hindus (including low castes)
pitted against the subaltern Muslim community. In addition, linguistic groups,
regional groups and women all add layers of complexity to the meaning of
inter group disparity that makes straightforward generalizations impossible.

Race and caste


Another reason makes India of special interest. The caste system has fascinated western scholarship, which has often seen direct parallels between racial
divisions in color-segregated societies and caste divisions in India. While
several of the manifestations of racism and casteism are identical, especially
towards those at the receiving end, we would like to suggest that there are
fundamental differences between race and caste as social categories.4 We
use the word race in a qualified sense: modern physical anthropology no
longer subscribes to the popular typology of race. However, given the widespread use of the term and the fact that disparities in several societies are

6 Ashwini Deshpande and William Darity, Jr.


race-based, a volume that discusses both race-based and caste-based
disparities ought to devote some space to a discussion of race and caste. To
begin with, the histories of the two systems differ greatly. Racism is a direct
product of slavery under colonialism: the ascriptive differences between the
slaves and their masters were extended to defining group characteristics. The
negative stereotyping of blacks truly began with capitalism and was consolidated during colonialism.
Caste, on the other hand, represents a system of social stratification that
pre-dates colonialism by centuries. Therefore, for caste to be color-coded,
there would have to be a strong historical basis. The history of present-day
India does not in fact offer straightforward answers to why the caste system
ought to be color-coded. The racial theory of Indian civilization is a formation
of the late nineteenth century, when in the wake of slave emancipation,
whiteblack relations in the Anglo-Saxon world were being restructured with
ideological support from a rush of racial essentialism (Trautmann 1997:
208). Another reason that the theory is erroneous is that the Indus valley
civilization predates the arrival of the Aryan-speaking people, so to argue that
the Indian (sic) civilization is the product of the conflict between lighterskinned Aryans and darker-skinned aborigines is misleading. This racial
theory was extended to the formulation of the racial theory of caste.5 One
important basis of the racial theory of caste is that Varna (the ancient Indian
caste divisions, see Chapter 7 in this volume for definitions) can be interpreted
as skin color. However, there is no evidence to suggest that the Varnas are
racially different among themselves. Trautmann (1997: 211) analyzes the
British colonial quest:
In this fantastic back-projection of systems of racial segregation in the
American South and in South Africa onto early Indian history, the
relations of the British new invader from Europe with the peoples of
India is prefigured thousands of years before by the invading Aryans. But
what the British encountered was not their Aryan bretheren, as Max
Mueller wanted to have it, but a mingled population toward whom a
supposed perduring prejudice of whites against interracial sexual
relations (or rather a perduring mixture of repulsion and desire)
structured those relations in a certain hypergamous way.
B. R. Ambedkar, the most significant Dalit leader of the twentieth century,
one of the foremost theorists on the caste question and author of the
constitution of independent India, has investigated the origins of the caste
system in great detail. His analysis of Vedic texts (Ambedkar 1970) firmly
rejects the western racial theory of caste formation.6 He reiterates the point
that Aryans were not a race. He points out that the word is pronounced in two
different ways (one with a long a at the beginning and another with a short
a) and the two words Arya mean several different things in the texts
including enemy, respectable person, name for India, owner, Vaisya,

Introduction

or citizen none of which indicates a race. He finds no mention in the Rig


Veda of an Aryan invasion and instead finds evidence of sporadic fighting
between Aryas and Dasyus rather than a fully fledged conquest. Religion
rather than racial animosity seems often to have been the cause of the conflict.
He finds no evidence in support of the assertion that the Dasas (in the racial
theory of caste, the presumed dark-skinned aborigines in contrast to the whiteskinned Aryans) were a different race or even of a different skin color.
Given the historical complexities of the origins of the caste system, a
detailed assessment is outside the scope of this Introduction; a few comments
are, however, in order. First, the historical origins of the caste system are fuzzy
and it is not conclusively established that a system of social stratification did
not exist prior to the Aryan invasion. If something akin to the caste system
existed among the generally dark-skinned aborigines, then skin color would
have not been the basis for the various social distinctions. It also helps to
remember that Aryans were truly speaking a linguistic group and not a race
in the current sense of the term.7
The racial theory of caste proposes that the Brahman might have descended
from the Aryan, thus explaining his superiority in the caste hierarchy.
However, it is noteworthy that the Brahman was a professional priest without
parallel in Aryan tradition elsewhere; in later India, he acquired virtual
monopoly of almost all ritual (Kosambi 1985). Given centuries of migration
and intermarriage, there is also no evidence of one particular group being
established as the descendant of the Aryan-speaking people. The word arya
or arya putra is sometimes found in the literature to refer to the royalty, who
are not Brahmans but are typically Kshatriya (though not always; there have
been important Sudra kings as well). To make the picture more complicated,
Kosambi (1985) traces the pre-Aryan features of Brahmanism and also the
non-Aryan descent of several Brahman castes. He suggests that the Brahman
priest was an individual supported neither by the state nor the king, often on
the tribal fringe. It is with his alliance with the warrior classes that the
reorganization of the caste system begins. Kosambi links this to a higher level
of production, regular settlements, the inevitable decay of tribal organization
with the rise of a new type of property (1985: 107).
Second, the presumed skin colors of the four varnas that are found in the
nineteenth-century discourse are difficult to justify: white for Brahmans, red
for Kshatriya, yellow for Vaisyas and black for Sudras. Klass (1980) suggests
that varna may not refer to complexion or supposed skin color, but rather to
some kind of spiritual coloration or aura (1980: 40). Ambedkar (1970) suggests
several meanings of the word varna, one of which is class and finds the latter
meaning more compeling than color. It is interesting to note that the
Manusmriti, a text dated between the fourth century BC and the second century
AD that outlines the basic differences between castes and sets forth a highly
detailed caste code, has no reference to skin color as being the basis of the
ranking of castes.8 Today there are close to 3,000 jatis (the contemporary caste
divisions) in existence, and hence a jaticolor link is virtually impossible to
establish.

8 Ashwini Deshpande and William Darity, Jr.


Third, the geographical variations in skin-shade differences in India seem to
dominate the caste differences.9 India is a virtual ethnographic museum, as all
the major racial types, the Caucasian type, the Negroid type, the
Mongoloid type, and so forth can be seen in different regions of the country.
As we have stated earlier, these grand racial aggregations are no longer
accepted by physical anthropology but they persist in popular imagination and
we mention them only to point out the regional diversity in phenotype to be
found in India. Klass (1980) also points out how skin color and hair color
lightens as one moves from the southeast to the northwest of the country and
finds no reason to believe that this would have been otherwise 3,000 years ago.
In its attempt to prove the racial theory of the Indian civilization, the
British administration commissioned investigations into the distinctions in
skin shade and phenotypical features (such as length of the nose, cephalic
index, etc.). Herbert Hope Risley (18511911), a member of the Indian
Civil Service who served in India from 1873 to 1910, was instrumental in
concretizing the racial theory of caste in the 1901 Census Report (The People
of India) and a journal article The study of ethnology in India (1891). One
of Risleys best-known statements is the social position of a caste varies
inversely as its nasal index. Trautmann (1997) after a detailed review of
contending theories and evidence, concludes that both Risley and Max
Mueller show a tendency to exaggerate the significance of noses in ancient
Indian evidence (Aryans presumably with long, lepto-rhine noses in conflict
with a black snub nosed platyrhine race).
Klass (1980) points to the near impossibility of determining with certainty
what the skin color and phenotype a given group might have had 3,0005,000
years ago. Ghurye (1932) summarizes the conclusions of Risleys studies and
reports that a systematic relationship between jati affiliation, skin color and
phenotypical features cannot be drawn. He finds, for instance, that a brahman
in Uttar Pradesh has more in common with a chamar (a Dalit caste) in Uttar
Pradesh than with a Brahman in Kerala. The predominantly western
persistence with the racial theory of caste has encouraged some contemporary
investigations into the castecolor correlation, but they are not compeling for
the simple reason that they focus on a very small sub-set of jatis in North India,
leaving out of their investigation the vast majority of darker-skinned populations not only in the north and west but in the south and east of the country.10
Thus, jati is not ascriptive insofar as it is not possible to identify jati by simply
looking at the individual. Often, though not always, jati is indicated by the last
name (surname) of the person. However, naming conventions differ across the
country: for instance, in the four southern states the first name is traditionally
written last. Even when jati is indicated by the last name, since jatis are
regional categories it is impossible to remember the exact placement of close
to 3,000 categories. However, people have a way of ascertaining the jati of an
individual if they want to either directly or by discreet enquiry. But this
requires some effort and a corresponding inclination, which is typically not
made with respect to each person that one interacts with. Thus, while a racial

Introduction

affiliation is based upon physical characteristics, a caste affiliation is not, and


hence is not immediately possible to decipher.
In conclusion, one can say that skin shade does not form the basis for social
stratification in Indian society, whereas caste does. Having said that, it is
equally true that as in several other societies, a lighter skin (the word used in
India is fair rather than white) is considered an attribute of beauty that
earns a premium in the marriage market, but there is no socially recognized
group of fair-skinned individuals in opposition to another group of darkerskinned ones.

Cross-national studies of inter-group disparity


However, whether boundaries are of clan or of color, the end result, especially
from the point of view of oppressed groups, is similar and equally serious
across an otherwise diverse set of countries. That is what unites the chapters in
this volume. While highlighting the similarities, the individual country studies
present a nuanced understanding of inter-group disparity across countries,
since group divisions in each society are rooted in their individual histories
that are not uniform across the world.
Two chapters deepen our knowledge of the empirical gaps between groups
and the extent of estimated employment discrimination in Brazil and in
Canada. Peggy Lovells Chapter 2 in this volume on Brazil consolidates the
puncturing of the still popular myth, the myth of racial democracy that
Brazil is a country where inequality is solely a matter of social class and
not race. France Twines superb ethnographic study, Racism in a Racial
Democracy (1998), provides an effective qualitative demolition of the myth,
while Lovells work provides the detailed quantitative dimension.
Lovell demonstrates that sustained and significant disparities persist
between Afro-Brazilians (both blacks and browns) and Euro-Brazilians or
whites. She also demonstrates that employment discrimination is an important
factor depressing the earnings and occupational attainment of both black
and brown Brazilians and examines the spatial aspects of disparity and
discrimination.
In an earlier coauthored study, Morton Stelcner (Stelcner and Kyriazis
1995) examined earnings inequality by race and ethnicity in Canada using the
1981 Canadian census. Chapter 3 in this volume comprehensively reviews the
existing literature on intergroup disparity in Canada based upon a variety
of surveys, and updates the StelcnerKyriazis findings by utilizing the 1991
Census. A striking result is the persistence across both censuses of employment discrimination against blacks in Canada. The 1981 study lacked
sufficient observations on Canadas indigenous peoples to include them in the
study; that omission is corrected in the 1991 census. It is notable that the 1994
World Development Report (UNDP 1994: 256, 32, 100) reports that the
aboriginal population of Canada constitutes about 2.3 percent of the total,
possesses a life expectancy 56 years lower than the rest of Canadians, and has

10 Ashwini Deshpande and William Darity, Jr.


a real income one-third less than the rest of Canadians. Moreover, the
unemployment rate among Aboriginals is twice as high as the rate for the
average Canadian, and they are six times as likely to be murdered and far more
likely to suffer from depression.
Patrick Masons Chapter 4 in this volume, utilizing US data from the Panel
Study on Income Dynamics (PSID), directs our attention to one of the central
underlying assumptions of racism, the cognitive inferiority of members of a
subaltern group. Mason challenges the position that the inter-racial gap in
economic inequality in the USA can be explained fully by a black cognitive
skills deficit. Masons finding that discrimination still plays an important role
should not be shocking. Even in South Africa, where racial gaps in schooling
are still so great even after the ending of apartheid (black mean years of
schooling remain below six) that it would seem that maintenance of white
privilege would not require exclusionary practices, researchers still find
substantial evidence of market-based discriminatory losses in earnings for
blacks (Treiman, McKeever and Fodor 1996; Hinks 1999).
Two of the three remaining chapters in the volume focus on social policies
aimed at addressing intergroup disparity, multiracial meritocracy in
Singapore and the reconciliation process in Australia. In his Chapter 6,
R. Quinn Moore has coined the phrase multiracial meritocracy to describe
Singaporean policy-makers approach to racial inequality within their borders.
The phrase connotes the surprising consonance Singaporean policy
establishes between a simultaneous subscription to race consciousness and the
meritocratic imperative. Proponents of the meritocratic principle in the USA
and India argue that this is inconsistent with being color-conscious or casteconscious. Singaporean policy breaks with that dichotomy.
Samuel Myers, Jr. in Chapter 5 examines the reconciliation process in
Australia with an eye towards understanding its potential consequences
for the stark disparities that exist between the aborigines and the rest of
Australias population. Myers wonders whether reconciliation processes
elsewhere South Africa is another country that is undergoing such a process
will substantively alter the condition of the subaltern group. He specifically
wonders whether that will be the case in Australia. He examines attitudes and
beliefs of Australians that might support the status quo or permit conditions to
be changed on behalf of Australias indigenous citizens.
The volume has a chapter on Indias caste system (Chapter 7) by one of the
two coeditors of the volume, Ashwini Deshpande. Elsewhere Deshpande
(2000, 2001) has documented the magnitude and persistence of intercaste
economic disparity in India. Here her task is theoretical. She critically reviews
the economics literature that has attempted to explain the continuity and
consequences of the caste system. Much of this literature bears a resemblance
to the literature that has emerged on the economics of discrimination and
raises some of the same questions. Some of this literature is more nuanced
in seeking to establish the contours that distinguish the operation of Indian
casteism for other systems of social domination based upon group identity.

Introduction

11

Jacob Meermans Chapter 8 on Japan illustrates yet another grave intergroup disparity that is not color-based. He analyses the disparity between the
Buraku minority and the mainstream Japanese, groups that are genetically
and culturally identical. Discrimination against the Burakumin persists in
making them low-status and low-income. Meerman comprehensively documents facets of discrimination, disparity and segregation. The uniqueness of
his chapter lies in linking this situation with an analysis of the militant
advocacy of the Buraku Liberation League (BLL) and the complex interrelationship between the actions of the League and the Japanese government
response. He reaches an interesting conclusion that, given the high mobility
into and out of the Buraku, the Burakumin might be considered as a segment
of a Japanese under-class, rather than successors to an historical out-caste.
This raises interesting points of comparison with other countries the dalits
(low castes) in India have not yet reached this stage.
Faridah Jamaludins Chapter 9 on Malaysias New Economic Policy (NEP)
focuses attention on a unique form of affirmative action. Introduced in the
1970s, the NEP was designed, in addition to the reduction of poverty, to
protect the economic interests of the indigenous Bumiputera community, and
to reduce inter-racial inequality. While the disparity between the Chinese and
the Malays is well documented and persistent, what is interesting is that a large
part of the present-day Chinese and Indian populations are descendants of
indentured labour that worked on the rubber plantations in the nineteenth
century. The rise of an erstwhile subaltern group has now led to a situation
where some form of protection for the indigenous group is essential to keep
inter-ethnic disparity in check (a policy for the protection of sons-of-the-soil).
As Jamaluddins Chapter 9 highlights, the success of this policy is crucially
linked to the vagaries of globalization and its impact on the fortunes of the
Malaysian economy, an issue about which all countries in the developing
world need to be concerned.
The eight chapters in this volume collectively expand our knowledge of the
international dynamics of inter-group disparity. This is a research program in
its relative infancy and these chapters may help it to begin to walk.

Notes
1 Review of Social Economy, 63:3.
2 See Jones (2001).
3 See, for instance, American Association of Physical Anthropologists, AAPA
Statement on Race, American Journal of Physical Anthropology, 101, 1996, 56970.
4 See Beteille (1971) for a concise and lucid review of the differences as well as the
similarities between the two systems.
5 See Klass (1980) for an excellent critical review of the theories of the origins of the
caste system.
6 Ambedkar summarizes the western racial theory of caste in the following way
(and then proceeds to demolish it):
i The people who created the Vedic literature belonged to the Aryan race.

12 Ashwini Deshpande and William Darity, Jr.


ii This Aryan race came from outside India and invaded India.
iii The natives of India were known as Dasas and Dasyus who were racially
different from the Aryans.
iv The Aryans were a white race. The Dasas and Dasyus were a dark race.
v The Aryans conquered the Dasas and Dasyus.
vi The Dasas and Dasyus after they were conquered and enslaved were called the
Shudras.
vii The Aryans cherished color prejudice and therefore formed the Chaturvarnya
whereby they separated the white race from the black race such as the Dasas
and the Dasyus (Ambedkar 1970: 578).

8
9
10

Ambedkar is scathing in his criticism of those who believe in this theory: the
theory is based on pleasing assumptions and inferences based on such assumptions . . . it is a perversion of scientific investigation. It is not allowed to evolve out
of facts. On the contrary, the theory is preconceived and facts are selected to
prove it (1970:734).
Trautmann argues that the notion of the Aryan Race was created by the
German Sanskritist Friedrich Max Mueller in the nineteenth century. While he
consistently advocated the brotherhood of the Aryan peoples, the kinship
between Indians and Europeans, he never visited India. For a critical account of
his two race theory of India, see Trautmann (1997), Chapter 6.
See The Laws of Manu, trans G. Buehler, Sacred Books of the East, 25, ed. M.
Mueller (Motilal Banarsidass, Delhi, 1964).
See the introduction to NFHSI (1995) for broad geographical patterns.
See Das and Mukherjee (1963); Jawal (1979).

References
Ambedkar, B. R. (1970) Who Were the Shudras? How They Came to be the Fourth
Varna in the Indo-Aryan Society, Thackers, Bombay.
American Association of Physical Anthropologists (1996) AAPA Statement on
Race, American Journal of Physical Anthropology, 101, 56970.
Beteille, D. (1971) Race, Caste and Ethnic Identity, International Social Science
Journal, 23: 4, 51935.
Darity, W., Jr (1998) Intergroup Disparity: Economic Theory and Social Science
Evidence, Southern Economic Journal 64: 4, 80526.
Darity, W., Jr and A. Deshpande (2000) Tracing the Divide: Intergroup Disparity
Across Countries, Eastern Economic Journal 26: 1, Winter, 7585.
Darity, W., Jr and J. Nembhard (2000) Racial and Ethnic Economic Inequality: The
International Record, American Economic Review, Papers and Proceedings, 90:
2, 30811.
Das, S. R. and D. P. Mukherjee (1963) A Spectrophotometric Skin Colour Survey
Among Four Indian Castes and Tribes, Zeitschrift for Morphological Anthropology, 54, 190200.
Deshpande, A. (2000) Does Caste Still Define Disparity?: A Look at Inequality in
Kerala, India, American Economic Review, Papers and Proceedings, 90: 2, 3225.
Deshpande, A. (2001) Caste at Birth? Redefining Disparity in India, Review of
Development Economics, 5: 1, 13044.
Ghurye, G. S. (1932) Caste and Race in India, Popular Prakashan, Mumbai (reprint,
2000).
Hinks, T. (1999) Racial Wage Discrimination and the End of Apartheid in South

Introduction

13

Africa: A Multilateral Approach, Working Paper, Middlesex University School


of Business, October.
Jawal, I. J. S. (1979) Skin Colour in North Indian Populations, Journal of Human
Evolution, 8, 3626.
Jones, R. S. (2001) Black/Indian Relations: An Overview of the Scholarship,
Transforming Anthropology, 10: 1, 216.
Klass, M. (1980) Caste: The Emergence of the South Asian Social System, Institute for
the Study of Human Issues, Philadelphia.
Kosambi, D. D. (1985) An Introduction to the Study of Indian History, Popular
Prakashan, Bombay.
National Health and Family Survey of India (NFHS-I), 1995.
Nesiah, D. (1997) Discrimination with Reason? The Policy of Reservations in the United
States, India, and Malaysia, Oxford University Press, Delhi.
Stelcner, M. and N. Kyriazis (1995) An Empirical Analysis of Earnings Among
Ethnic Groups in Canada, International Journal of Contemporary Sociology, 32: 1,
4179.
Trautmann, T. R. (1997) Aryans and British India, University of California Press,
Berkeley, Los Angeles and London.
Treiman, D. J., M. McKeever and E. Fodor (1996) Racial Differences in
Occupational Status and Income in South Africa, 1980 and 1991, Demography,
33: 1, 11132.
Twine, F. W. (1998) Racism in a Racial Democracy: The Maintenance of White
Supremacy in Brazil, Rutgers University Press, Piscataway, NJ.
UNDP (1994) Human Development Report, Oxford University Press, New York.
UNDP (2002) Human Development Report, Oxford University Press, New York.

Race, gender and regional labor


market inequalities in Brazil
Peggy A. Lovell

Introduction
No other country in the Americas has constructed such a persistent ideology of
racial equality as Brazil. Often contrasted with the USA, Brazilian postslavery race relations were said to be harmonious, tolerant and devoid of
prejudice or discrimination. The image of presumed equality was based
primarily on Brazils unparalleled level of miscegenation among European,
African and indigenous peoples.1 Widespread intermixing of the population
gave rise to a unique pattern of social differentiation in which, allegedly, racial
appearance (phenotype) rather than origin was key. Owing to the resulting
ambiguity of racial identity, many Brazilians denied the existence of race or
racism in their country. Race relations in Brazil, as a result, received much
attention, especially among North American social scientists.
However, recent empirical research has amply documented the persistence
of racial prejudice and discrimination. Brazils image of racial equality has
eroded greatly since the 1980s. Today, vigorous public debate over Brazils
image of racial equality has displaced the ideology of racial democracy. The
overwhelming evidence makes it clear that racial inequality, prejudice and
discrimination are Brazils social reality.
Scholars often have argued that one of the basic determinants of contemporary racial inequality is the geographic polarization of Brazils economy and
population (Hasenbalg 1979, 1985; Andrews 1992). Of the total population in
1991, 44.5 percent of the 69,651,161 Afro-Brazilians lived in the impoverished
and underdeveloped Northeast, while the white population (52 percent)
was concentrated in the industrialized Southeast (IBGE 1996). Because of
locational disadvantages, Afro-Brazilians are thus said to be handicapped
because they are concentrated in regions where there are fewer social and
economic opportunities.
Unequal regional development and population distribution has characterized Brazilian society since colonial times (Merrick and Graham 1979; Wood
and Carvalho 1988). Population and regional imbalances are the legacy of the
boom and bust cycles of the three colonial export commodities: sugar, gold
and coffee. The scarcity of labor to fuel sugar plantations during the sixteenth

Race, gender and regional labor market inequalities in Brazil 15


and seventeenth centuries was the impetus for importing African slaves into
the Northeast. In the eighteenth century, with the discovery of gold and the
concomitant decline in sugar production, the economic and population center
of gravity shifted to central and southern Brazil. This shift left the oncewealthy northeastern plantation economy in ruins and from this point on
development favored southern Brazil. It was the southern expansion of coffee
exports during late nineteenth and early twentieth centuries that led to the
incipient industrialization of So Paulo, built first on slave and later subsidized
European immigrant labor.2
The great fortunes accumulated from coffee exports provided the
foundation to build So Paulos industrial economy and attracted roughly 3.5
million European immigrants. By the 1920s So Paulo became the most
advanced region of the country and by the 1940s the state had the largest
concentration of manufacturing in all of Latin America (Wood and Carvalho
1988). The predominantly white regions of So Paulo and the Southeast
remain the nations locus of manufacturing and finance (Kowarick and
Campanario 1986). In 1990, the Southeast produced 56.2 percent of Brazils
total gross domestic product (GDP), as compared to the Northeasts share of
15.9 percent (Baer 1995: 277). Over time, the consequence of such cumulative
effects has been sharp spatial disparities.
Continued growth and diversification of the Brazilian economy has lessened
but not eliminated the unequal distribution of wealth and population. From
the 1950s, industrialization in south central Brazil lured Afro-Brazilian
migrants from the Northeast and rural areas to the dynamic urban metropolises, especially So Paulo. The spatial redistribution of the population was
accompanied by notable gains in Afro-Brazilian urban employment. Between
1950 and 1980 the proportion of individuals of African descent employed in
cities increased from 36 to 62 percent (Oliveira, Porcaro and Arajo Costa
1985). Yet, at the same time, the occupational structure moved toward more
skilled jobs. As a result, in 1991, Afro-Brazilians continued to be disproportionately concentrated in agriculture, construction and personal services
particularly domestic employment the lowest-paid and most onerous jobs
(Lovell 1998).
Brazils four decades of rapid economic expansion and substantial social
and demographic change have erased neither unequal population distribution
nor unequal regional development. Despite internal migration, the proportion
of the pardo (brown) and preto (black) workforce living in the Northeast fell by
only 6.2 and 7.9 percent, respectively between 1890 and 1991 (see Table 2.1).
The phenomenal growth, which the Brazilian economy experienced between
1956 and 1984 similarly did little to reduce regional disparities in economic
development. Today, the Northeast continues to lag far behind the rest of
the country in terms of income level, educational achievement and other
indicators of living standards. Sharp inequalities thus remain between North
and South and between black and white.
In this chapter I address the issue of race in Brazil by examining the

16 Peggy A. Lovell
Table 2.1 Regional distribution of the population by race, Brazil, 18901991
White

Pardo

Preto

1890
Northeast
Southeast
South
Other

32.8
46.5
16.4
4.3

52.1
37.4
4.5
5.9

40.2
51.7
5.0
3.1

1950
Northeast
Southeast
South
Other

23.4
49.8
21.9
4.9

58.3
26.1
2.9
12.6

42.0
46.9
6.4
4.6

1980
Northeast
Southeast
South
Other

14.5
53.2
24.8
7.5

49.6
28.3
5.0
17.1

33.2
51.5
8.5
6.7

1991
Northeast
Southeast
South
Other

15.0
51.9
24.3
8.9

45.9
30.5
4.6
19.01

32.3
49.9
9.3
8.5

Sources: 1890, Directoria Geral de Estatistica (1898: 23); 1950, IBGE (1956: 69); 1980, IBGE
(1983: 345); 1991, IBGE (1996: 17880).

relationship between uneven regional development and labor market


inequalities. My focus is on labor market disparities among white and AfroBrazilian women and men. The central thesis of my study is that both racial and
gender discrimination play a significant role in labor market outcomes, yet
these outcomes are mediated by the geographic regions level of development.
Using data from the 1991 Demographic Census, I compare labor market
indicators in two key regions of the country: the urban areas of the states of
So Paulo (in the South) and Baha (in the North). These two regions are
significant because they reflect the sharp racial and developmental contrasts
between North and South.

Racial identity and Census categories


Demographic censuses and annual household surveys are the only sources of
national-level information on the color composition of Brazils population.
According to estimates, the 1991 Census reported that nearly half of the 147
million population is either pardo or preto. This large proportion of AfroBrazilians (pardos and pretos) results from approximately 3.6 million Africans
who were brought to the Portuguese colony during the three and a half
centuries of the slave trade (Merrick and Graham 1979). Brazil was the last

Race, gender and regional labor market inequalities in Brazil 17


country in the Americas to end slavery and the Portuguese were the largest
importers of slaves, bringing to Brazil 38 percent of the approximate 9.5
million Africans forcibly transported to the Americas.
My empirical analysis relies on the 1980 and 1991 demographic censuses.
The racial terminology of the Census is a respondent-defined system of skin
color and ethnic identity: branco (white), pardo, preto, amarelo (yellow) and
indigena (indigenous).3 Because my focus is on Afro-Brazilians and the size of
the Asian and indigenous populations is small, I have excluded the amarelo
and indigena categories from this analysis.4 The color terminology used by the
Brazilian Census leaves no doubt that the categories reflect social definitions
of skin color rather than biological definitions of race. There is controversy
regarding the validity of the Census Bureaus color classification scheme
(Harris 1970; Harris, Consorte, Land and Byrne 1993). To evaluate the
validity of the color categories, several scholars have analyzed the data and
have concluded that while far from perfect the data are valid enough to
yield reliable analyses (Silva 1988, 1996). Nevertheless, doubts remain about
the stability of self-reported information over time.
To investigate mobility from one racial category to another, Wood (1991) in
a study of 195080 Census data found that while the boundary between white
and Afro-Brazilians was remarkably stable, there was evidence of color
reclassification from the preto to the pardo category. His findings provide
compeling reasons to collapse preto and pardo into a single Afro-Brazilian
category when Census data are used to analyse changes in racial disparities
over time. Based on this evidence, I retain the three-color categories for the
analysis of single-year data and whenever data are compared at two points in
time I combine pardos and pretos into a single Afro-Brazilian category.

Workforce characteristics
Associated with the unequal regional distribution of Brazils population and
economic development are disparities in workers labor market characteristics. In Table 2.2, I present summary indicators of the urban So Paulo and
Baha workforce by color and sex. The results show substantial racial and
regional disparities among women and men in education and state-sponsored
worker benefits.
In Brazil, education levels are low. The overwhelming majority of Brazilians
never achieve a high-school or college education. Rates of schooling also vary
significantly by race. Estimates from the 1991 Census showed that, among all
Brazilians, the rate of high-school and college completion was three times
higher for whites (16.3 percent for men, 17.3 percent for women) than for
pardos (5.9 percent for men and 7.2 percent for women) and pretos (5.3
percent for men and 6.1 percent for women) (IBGE, 1996).
In So Paulo and Baha we find a similar pattern. White women and men
completed more schooling than either pardos or pretos. In Baha, the
proportion of white women completing 12 or more years of schooling was

18 Peggy A. Lovell
Table 2.2 Selected indicators by color and sex, workers aged 1864, urban So Paulo
and Baha, 1991
Pardo

White
Indicator
A So Paulo
% completing 12
or more years
of schooling
Mean hours worked
per week
% with work card
% with Social
Security
% married
B Baha
% completing 12
or more years
of schooling
Mean hours worked
per week
% with work card
% with Social
Security
% married

Women

Preto

Women

Men

Men

Women

Men

24.0

17.6

5.8

3.8

6.9

5.0

40.0
69.6

44.3
86.3

41.8
66.1

45.4
87.0

41.5
63.8

44.8
84.7

80.0
45.3

90.3
66.2

71.2
41.3

88.5
65.7

70.9
35.6

87.4
63.1

23.7

20.9

7.5

5.0

5.1

3.3

37.7
67.4

43.3
76.9

40.3
58.9

44.8
76.4

41.5
52.5

45.0
77.6

75.2
47.2

80.3
64.4

63.7
39.9

77.1
62.9

57.6
32.5

78.4
63.0

Source: 1991 Brazilian Demographic Census Public Use Sample.

nearly five times greater than the proportion of Afro-Brazilian women.


Regional and pardo/preto differentials, on the other hand, followed no
consistent pattern. White women and pretos in So Paulo had higher levels of
schooling than their counterparts in Baha whereas white men and pardo
workers in Baha were more likely to have graduated from high school or
college than their counterparts in So Paulo.
Gender disparities were evident in both regions and across all color
categories. Compared to men, a greater proportion of working women had
completed high-school or some post-graduate education. These results may
suggest that, in order to be competitive in the labor market, women must have
higher levels of education than men. Higher educational qualifications may be
particularly important for Afro-Brazilian womens access to jobs.
Despite evidence of womens advantage in education, women in all color
groups were less likely than men to have either work cards (possession of
which guarantees the worker legal rights through labor legislation) or to be
covered by social security (which provides both health and pension benefits).
Regional differences in legal benefits also existed. Workers in So Paulo were
more likely to be covered by federal legislation than were Bahan workers. The
findings in Table 2.2 also challenge the allegation that women earn lower

Race, gender and regional labor market inequalities in Brazil 19


salaries than men because they work less than full-time. With the exception of
white women in Baha, all women worked 40 hours per week or more. Finally,
Table 2.2 presents worker participation by marital status. The results show
that working women were much less likely than working men to be married.
Marriage rates were highest among white workers and lowest among pretos.

Jobs and earnings


Table 2.3 tabulates occupational distribution by color and sex. From these
data I calculated indices of dissimilarity between each racial and gender
group. 5 In 1991 the overall index of dissimilarity between women and men was
40.8 in So Paulo and 47.7 in Baha. When the indices of dissimilarity by sex
are disaggregated by color, we find that white women experienced the lowest
occupational inequality (38.6 in So Paulo and 37.5 in Baha) and preta women
Table 2.3 Occupational distribution by color and sex, workers aged 1864, urban
So Paulo and Baha, 1991
Total
Occupation

A So Paulo
Administration
10.6
Professional
11.6
Clerical
20.5
Industrial
37.9
Transportation/Comm. 9.5
Service
7.8
Domestic
2.1
Total (%)
100
Index of Dissimilarity
by Sex
Index of Dissimilarity
by Color
B Baha
Administration
7.2
Professional
12.3
Clerical
20.7
Industrial
36.1
Transportation/Comm. 10.7
Service
10.8
Domestic
2.1
Total (%)
100
Index of Dissimilarity
by Sex
Index of Dissimilarity
by Color

Pardo

White
F

5.1
12.5
19.8
13.8
30.7
22.1
11.8
33.9
0.3
9.0
8.0
7.0
24.3
1.8
100
100
40.8

3.6
13.8
28.9
21.9
25.1
25.0
4.1
21.7
0.3
9.3
9.2
7.3
28.8
1.1
100
100
47.7

Preto

6.1
23.2
34.7
10.8
0.3
6.5
18.3
100

5.9
5.8
16.6
48.0
10.9
10.0
2.8
100

2.8
9.4
22.3
15.5
0.4
12.0
37.7
100

5.2
7.4
16.4
48.2
10.6
9.7
2.6
100

2.0
12.2
16.0
12.4
0.2
11.7
45.5
100

38.6

6.2
41.3
31.0
2.6
0.2
5.6
13.1
100

46.2

49.8

20.1

29.6

19.4

34.0

5.9
10.1
20.7
38.4
11.5
11.2
2.2
100

3.0
26.4
25.0
4.5
0.3
10.1
30.7
100

3.2
8.3
13.9
47.8
9.4
14.0
3.4
100

1.5
17.8
14.7
4.5
0.2
11.8
49.4
100

37.5

49.1
23.4

Source: 1991 Brazilian Demographic Census Public Use Sample.

24.1

56.4
35.3

44.5

20 Peggy A. Lovell
suffered the highest disparities (49.8 in So Paulo and 56.4 in Baha. The
regional comparison shows that gender inequality was greater in Baha than in
So Paulo for Afro-Brazilians. Two areas of the labor market accounted for
most of this gender disparity: the industrial sector where men were concentrated and the domestic sector where women were heavily represented.
Indices of racial inequality also were higher in Baha than in So Paulo. In
both states, racial dissimilarities were greater for Afro-Brazilian women than
men. Preta women clearly suffered extreme disadvantages in the Brazilian
labor market, experiencing the greatest gender and racial inequality. Much of
this disadvantage was due to preta womens over-representation in domestic
work. By 1991, half of all employed black women worked as domestics.
Generally, pretos were more disadvantaged in the workforce than pardos.
Human capital theorists argue that such gender and race gaps in education
and occupation lead to overall malefemale and blackwhite earnings
differences. As a result of the persistence of unequal opportunities by race and
gender shown in Brazil, we can expect overall differences in wages. If most
pardos and pretos have lower levels of schooling and are in low-paying
occupations, then it is not surprising that they experience lower overall wages.
Given Brazils marked regional inequalities in levels of economic and social
development, we also can expect lower wages in the Northeast.
Table 2.4 presents overall estimates of average monthly wages for 1991
urban So Paulo and Bahan workers between the ages of 18 and 64. As
expected, the findings show that wages were higher in So Paulo than in Baha.
In each region, however, racial and gender gaps in earnings existed. AfroBrazilians and women, for example, received roughly 60 percent of the
respective wages of whites and men in So Paulo. However, both the gender
and color wage gaps were highest in Baha. Preto women and men in Baha,
Table 2.4 Average monthly wagea by color and sex, workers aged 1864, urban
So Paulo and Baha, 1991
Average monthly wage

Women as a percentage of men

White

Pardo

Preto

White

Parda

Preta

A So Paulo
Women
Men

129,331
224,752

60.76b
58.91

61.27c
57.47

57.54d

59.35

61.34

B Baha
Women
Men

109,494
211,543

49.12
44.02

37.56
35.53

51.76

57.75

54.71

Source: 1991 Demographic Census Public Use Sample.


Notes
a Monthly wages are in 1991 Cruzeiros.
b Pardo earnings expressed as a fraction of white earnings by sex.
c Parda earnings expressed as a fraction of white earnings by sex.
d Womens earnings expressed as a fraction of mens earnings by race.

Race, gender and regional labor market inequalities in Brazil 21


who, respectively, earned only 38 and 36 percent of the wages of white
workers, experienced the highest levels of inequality. A compeling question is
whether these wage differentials persist after controling for key human capital
variables such as level of education. To answer this question, I estimated
average monthly 1991 wages by level of schooling, race and sex; the results are
presented in Table 2.5.
The findings in Table 2.5 show that in both regions whites earned more than
Afro-Brazilians and men earned more than women within every educational
category. The racial wage gap actually increased with education for both
women and men. For instance, in So Paulo among women with 04 years of
schooling, parda and preta women earned roughly 90 percent of the wages
of white women. Yet, at the highest level of schooling, white women earned
nearly one-fourth more than Afro-Brazilian women did. We see similar
Table 2.5 Average monthly wagea by years of completed schooling, color and sex,
workers aged 1864, urban So Paulo and Baha, 1991
Average monthly wage

Women as a percentage of men

Years of schooling

White

Pardo

Preto

White

Parda

Preta

A So Paulo
Women
04
Cr$
58
912
13+

67,373
83,784
127,717
242,349

0.90b
0.85
0.80
0.76

0.91c
0.87
0.79
0.74

0.51d
0.56
0.57
0.47

0.54
0.57
0.61
0.57

0.58
0.61
0.61
0.57

Men
04
58
912
13+

130,998
148,850
223,616
518,939

0.86
0.85
0.75
0.63

0.81
0.80
0.73
0.61

B Baha
Women
04
58
912
13+

30,513
41,023
88,698
242,818

0.87
0.82
0.72
0.73

0.79
0.75
0.67
0.63

0.40
0.47
0.48
0.46

0.47
0.47
0.49
0.52

0.45
0.48
0.48
0.64

Men
04
58
912
13+

75,760
87,888
185,344
533,219

0.74
0.81
0.70
0.64

0.70
0.72
0.67
0.45

Source: 1991 Brazilian Demographic Census Public Use Sample.


Notes
a White monthly wages expressed in 1991 Cruzeiros.
b Pardo earnings expressed as a fraction of white earnings by sex.
c Preto earnings expressed as a fraction of white earnings by sex.
d Womens earnings expressed as a fraction of mens earnings by race.

22 Peggy A. Lovell
patterns among men, with an even wider racial gap in earnings. At the highest
level of schooling, Afro-Brazilian men in Baha earned only 45 percent of the
wages of white men. Regional comparisons indicate that racial disparities in
wages were higher in Baha than in So Paulo.
Across all color groups, the wage differential was greatest by gender. The
largest wage gaps were between white women and men. For example, at the
highest level of schooling, white women earned less than one-half of white
mens wages. A comparison of parda and preta women and men shows a similar
pattern of gender differences: Afro-Brazilian women were paid less than
Afro-Brazilian men in all educational categories. These patterns of wage
inequality suggest that gender inequality in wages was even greater than racial
inequality.

Labor market discrimination over time


In the USA an extensive literature has explored the persistence of racial and
gender wage inequality. Researchers maintain that racial and gender differences in earnings result from structural and economic factors on the one hand,
and some type of gender/race discrimination effect on the other. Research
on labor market inequalities in Brazil has found significant evidence of
discrimination (Silva 1978, 1985; Lovell 1993, 1994; Lovell and Wood 1998;
Telles and Lim 1998).
To estimate both racial and gender wage discrimination in So Paulo and
Baha, I performed a Blinder (1973)Oaxaca (1973) type of decomposition
analysis based upon ordinary least-squares (OLS) regression with the log of
average monthly wages as the dependent variable. In order to explore the
extent to which discrimination in Brazil has changed, I analyzed data from
1980 and 1991. Because the self-classification of color in the Brazilian Census
has been shown to be unstable over time (as discussed above), I combined
pardos and pretos into a single Afro-Brazilian category for the analysis.
The technique involves estimating four equations, one for Afro-Brazilian
men, one for white men, one for Afro-Brazilian women and one for white
women, in each Census year.6 For the wage analysis, I selected a set of
individual-level variables traditionally employed in models of earnings: job
experience, years of schooling, occupation, hours worked and marital status.
Results from these equations served as input into the decomposition model.
This technique partitions the earnings gap between two groups into three
parts: composition (the proportion of the difference that can be attributed to
unequal human capital endowments), discrimination (the amount of the wage
differential resulting from unequal pay), and interaction (the proportion of the
wage gap which measures the combined effects of unequal qualifications
and discrimination). The objective of this analysis is to investigate whether
over and above differences in education, occupation and additional sociodemographic variables race and gender exert independent effects on the
distribution of wages. Wage discrimination is said to occur when similarly

Race, gender and regional labor market inequalities in Brazil 23


qualified workers in the same job category receive unequal pay on the basis of
either sex or skin color.
Table 2.6 presents the results of the wage decomposition analysis for 1980
and 1991 in So Paulo and Baha. Wages for Afro-Brazilians and white women
are compared to those of white men. Five overall trends are particularly
striking: (1) Compositional differences were higher in So Paulo than in Baha
which represents greater disparity in human capital endowments among
workers in So Paulo. (2) Over time, compositional differences decreased
among all groups in both regions, reflecting gains in education and job
placement won by Afro-Brazilians and women. (3) Yet, despite these gains,
wage discrimination increased from 1980 to 1991 for all groups in both
regions. (4) Wage discrimination, for both 1980 and 1991, was higher in So
Paulo than in Baha. (5) the group which suffered the greatest wage discrimination was white women; in 1991 a striking 99 percent of the differential in
their pay was due to unequal wages for given characteristics in So Paulo (112
percent in Baha).

Conclusions
In this study I was particularly interested in the relationship between a regions
level of economic development and labor market discrimination. The findings
suggest that while women and Afro-Brazilians in Brazils most developed
region had the advantage of higher levels of state-sponsored work benefits (a
work card and social security) and more equitable occupational and wage
distribution, they nevertheless experienced the greatest discrimination. In
Table 2.6 Decomposition of average wage differentials by color and sex, workers
aged 1864, urban So Paulo and Baha, 1980, 1991
(Base group = white men)
Afro-Brazilian
men

Afro-Brazilian
women

White women

1980

1991

1980

1991

1980

1991

A So Paulo
Composition
37.32
Discrimination
28.84
Interaction
33.84
Total difference (%) 100

27.59
40.00
32.41
100

12.03
45.09
42.88
100

11.56
51.37
37.07
100

3.45
90.71
12.73
100

6.11
99.26
6.85
100

B Baha
Composition
34.19
Discrimination
9.92
Interaction
55.89
Total difference (%) 100

26.32
22.82
50.87
100

11.99
31.57
56.44
100

9.27
46.05
44.68
100

7.16
101.71
5.45
100

9.89
111.59
1.70
100

Component

Source: 1980 and 1991 Brazilian Demographic Censuses Public Use Samples.

24 Peggy A. Lovell
contrast, in the less developed Northeast where racial and gender gaps in
education, occupation and wages were the most severe, discrimination was
lowest. As Darity (1998) has observed, labor market discrimination is less
needed when there are large disparities between minority and majority
groups. Wage decomposition analysis further shows that, even after controling for the standard predictors of earnings, wage discrimination increased
over time.
These findings suggest that discrimination will not vanish as Afro-Brazilians
and women progressively acquire adequate education or access to jobs. On
the contrary, as evidence from So Paulo indicates, economic growth and
development may generate more opportunities for upward mobility while
simultaneously increasing competition and strong incentives to erect gender
and racial barriers. Finally, these findings show that pretos and pardos did not
differ greatly from each other on the social and economic indicators analyzed.
In some cases, pardos did have higher social indicators than blacks, but only
slightly higher; and both groups always ranked far below whites. As other
studies have suggested, the color line in Brazil seems to be located between
whites and Afro-Brazilians, and not between pardos and pretos.
The stubborn persistence of gender and racial discrimination in Brazil
presents an especially daunting challenge today. Brazil is currently in the grip
of a profound economic crisis that has negatively impacted international
financial markets. One can suspect that federal policy and the political
willpower to further womens and blacks social and economic advancement
will decrease in an environment of economic crisis. In such a setting of fiscal
uncertainty, where Afro-Brazilians compose almost half of the national
population, white Brazilians have little incentive to accept proposals of
redistributive social policies. Likewise, continued structural reform and
privatization of the Brazilian economy will further reduce social welfare
spending. These economic changes may very well have a particularly negative
effect on women and the Afro-Brazilian population in terms of employment
and earnings. Thus, the possibility of widening racial and gender disparities in
Brazil is very real.

Notes
1 In Brazil, it was through the writings and lectures of Gilberto Freyre (1933) that
the idea of racial democracy gained currency. In the USA, observers such as
Theodore Roosevelt also promoted the Brazilian ideal of racial equality (Silva
1978). Reporting that Brazil had solved the race question, Black newspapers in
the USA during the 1910s and 1920s encouraged black emigration there.
(Andrews 1996).
2 Following abolition, Southeast coffee growers used tax revenues and state
subsidies to underwrite the costs of transporting millions of white Europeans to
southeastern Brazil. Efforts to increase the European population were part of the
Brazilian states political doctrine of whitening (branqueamento). The goal was to
make the Brazilian population whiter, Europeanized and therefore, better
(Skidmore 1974). A conservative estimate would place the total number of

Race, gender and regional labor market inequalities in Brazil 25

4
5

immigrants arriving in Brazil during the period 18201930 at between 4.5 and
5 million, of whom roughly 3.5 million remained (Merrick and Graham 1979;
Gebara 1986). The number of immigrants making their homes in Brazil quickly
matched the number of African slaves imported over a period of 300 years. The
majority of these immigrants clustered in the Southeast, where they remain concentrated today. Immigration had important consequences for the newly freed
slave. European immigrants received preferential treatment from both employers
and the state and succeeded in displacing black workers from the most dynamic
areas of the economy. At the moment of entering a free labor market, AfroBrazilians were pushed aside in the competition for jobs and other opportunities.
It is Brazils recognition of pardos, an intermediate or mixed racial category, that
distinguishes Brazilian race relations from those in the USA. Carl Degler (1971)
argued that in Brazil, a mulatto escape hatch exists whereby mulattoes occupy a
privileged position relative to blacks. Empirical results, for the most part, have
refuted Deglers argument and found that pretos and pardos, although different in
some respects, suffer similar levels of discrimination (Silva 1985; Andrews 1992).
The indigena category was not used in the 1980 Census.
The index of dissimilarity is a commonly used measure of inequality between
groups. In Table 2.3 it measures racial and gender differences in the occupational
sector distribution of workers. The index is calculated by summing the absolute
values of the differences in distribution for each category and dividing by two. The
result indicates the percentage of individuals in either racial group who would
have to move from one category to another (in the case of Table 2.3, from one
occupation to another) in order to produce complete equality. An index of 100
indicates total difference or complete inequality; an index of 0 indicates no differences and thus complete equality.
The decomposition model is:
(Y h Y l) = [(a h al) +X1(bh bl)] + b1(X h X l) + (bh bl) (X h X l)
The notation follows that of Iams and Thornton (1975) where: superscript h
indicates the high-wage groups (always white males in this study); superscript l
indicates the low-wage group (alternatively Afro-Brazilian men and women and
white women); Y stands for the natural logarithm of the wage rate; X l is the mean
of the ith explanatory variable; a is the regression constant; and b l is the partial
regression coefficient for the ith explanatory variable.

References
Andrews, G. R. (1992) Racial Inequality in Brazil and the United States: A
Statistical Comparison, Journal of Social History 26: 2, 22963.
Andrews, G. R. (1996) Brazilian Racial Democracy, 190090: An American
Counterpoint, Journal of Contemporary History 31: 3, 483507.
Baer, W. (1995) The Brazilian Economy: Growth and Development, Praeger,
Westport, CT.
Blinder, A. (1973) Wage Discrimination: Reduced Form and Structural Estimates,
Journal of Human Resources, 8: 4, 43665.
Darity, W. A., Jr (1998) Intergroup Disparity: Economic Theory and Social Science
Evidence, Southern Economic Journal 64: 4, 80526.
Degler, C. N. (1971) Neither Black nor White, Macmillan, New York.
Freyre, G. (1933) Casa-Grande and Senzala, Jos Olympio, Rio de Janeiro.
Gebara, A. (1986) O mercado de trabalho livre no Brasil, Editora Brasiliense, So
Paulo.

26 Peggy A. Lovell
Harris, M. (1970) Referential Ambiguity in the Calculus of Brazilian Racial
Identity, Southwestern Journal of Anthropology, 26, 114.
Harris, M., J.G. Consorte, J. Land and B. Byrne (1993) Who are the Whites?
Imposed Census Categories and the Racial Demography of Brazil, Social Forces,
72, 45162.
Hasenbalg, C. (1979) Discriminaco e Desigualdades Raciais no Brasil, Graal, Rio de
Janeiro.
Hasenbalg, C. (1985) Race and Socioeconomic Inequalities in Brazil, in P.-M.
Fontain (ed.), Race, Class and Power in Brazil, University of California Press, Los
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Iams, H. M. and A. Thornton (1975) Decompositon of Differences: A Cautionary
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IBGE (1996) Censo demogrfico 1991, Caracterstica Gerais da Populao e
Instruo, IBGE, Rio de Janeiro.
Kowarick. L. and M. Campanario (1986) So Paulo: The Price of World City Status,
Development and Change, 17: 1, 15974.
Lovell, P. A. (1993) The Geography of Economic Development and Racial Discrimination in Brazil, Development and Change, 21: 1, 83101.
Lovell, P. A. (1994) Race, Gender and Development in Brazil, Latin American
Research Review, 29, 735.
Lovell, P. A. (1998) Gender, Race and the Struggle for Social Justice in Brazil, paper
presented at the American Sociological Societys Annual Meeting, San Francisco.
Lovell, P. A. and C. H. Wood (1998) Skin Color, Racial Identity and Life Chances in
Brazil, Latin American Perspectives, 25, 90109.
Merrick, T. and D. H. Graham (1979) Population and Economic Development in
Brazil: 1800 to the Present, Johns Hopkins University Press, Baltimore.
Oaxaca, R. (1973) MaleFemale Wage Differentials in Urban Labor Markets,
International Economic Review, 14: 3, 693705.
Oliveira, L. E. G., R. M. Porcaro and T. C. N. Arajo Costa (1985) O Lugard do Negro
na Fora de Trabalho, IBGE, Rio de Janeiro.
Skidmore, T. (1974) Black into White, Oxford University Press, New York.
Silva, N. do Valle (1978) BlackWhite Income Differentials: Brazil, 1960,
unpublished PhD dissertation, University of Michigan.
Silva, N. do Valle (1985) Updating the Cost of Not Being White in Brazil, in P.-M.
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Telles, E. E. and N. Lim (1998) Does it Matter Who Answers the Race Question?
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Brazil, Cambridge University Press, Cambridge.

Earnings differentials among


ethnic groups in Canada
A review of the research
Morton A. Stelcner

Background
Immigration and immigration policy 1
Canada is characterized by an exceptionally large (17 percent) immigrant
population with an increasingly diverse ethnic/cultural profile.2 Canadas
immigration patterns were determined by a number of factors: colonization by
the French and British; the railroad age; the Great Depression; industrialization; and economic expansion. During the eighteenth and nineteenth
centuries, nearly all immigrants came from Britain and France (the so called
founding peoples). Until the twentieth century, more people emigrated
from Canada (to the USA) than immigrated. However, the completion of the
national railways attracted an unprecedented number of immigrants from
northern, central and eastern Europe to populate the newly opened Prairies.
During the settling of the Prairies, immigration peaked at 400,000 in 1913.
However, the onset of the Great Depression, closed the immigration door
until the end of World War II. By 1931, Canada was on its way to becoming a
multi-ethnic nation in which there was substantial representation of almost
every European ethnic group, still dominated by British (52 percent) and
French (28 percent); this distribution remained constant until 1941.
After the Second World War, immigration restrictions were relaxed in
order to accommodate increased labor demands of a rapidly expanding
economy. However, the 1953 Immigration Act continued to allow the government to bar entry for reasons such as ethnicity, nationality, and peculiar
customs, habits, modes of life or methods of property. British, (white)
Americans and, to a lesser degree, French immigrants were preferred. By the
end of the 1950s, Europe accounted for 84 percent of immigrants.
The year 1962 witnessed a landmark change in immigration policy in
response to pressing labor market needs and demographic goals, as well as
growing opposition in the late 1950s to restrictions based on ethnic origin and
race. Legislative changes officially lifted ethnic, racial or religious barriers to
immigrants who were qualified by reason of education, training, skills
or other special qualifications. The new regulations, however, still allowed

28 Morton A. Stelcner
European immigrants to sponsor a broader range of relatives than nonEuropeans. The 1967 Immigration Act formalized the 1962 regulations and
established a point system for selecting immigrants, with the main purpose
of aligning immigrant flows with the perceived needs of the economy. The Act
removed all traces of ethnic, national and racial preferences; it also constrained the discretionary power of overseas immigration officers. The new
immigration regulations had an immediate and profound effect on immigration streams in the late 1960s and 1970s: the share coming from Europe
decreased to about 50 percent, while the proportion from Asia, Africa, the
Middle East, and the Caribbean/Latin America increased sharply to 43 percent
from 16 percent in the late 1950s and early 1960s.
The 1978 Immigration Act introduced several new features. Greater weight
was given to considerations that would foster economic growth. The minimum
requirement was increased to 70 points (from the earlier 50); more emphasis
was also given to occupational skills and technical training and less weight to
general education. The Act introduced family reunification as a goal, partly
out of humanitarian considerations, and partly to address labor market needs.
In 1982 independent applicants could enter only if they had pre-arranged
employment, but this requirement was removed in 1986. Prompted by a
dramatic decline in the birth rate, greater emphasis was placed on the linkage
between immigration and population growth. The 1978 Act was further
amended in 1989 to cope with the arrival of large numbers of people claiming
refugee status.
Changes in ethnic diversity: 197096
The shift in immigrant source countries since the early 1970s markedly altered
the ethnic profile. Some 1.5 million immigrants arrived during the 1980s, twothirds of whom came from non-European regions: the representation of nonBritish and non-French Europeans declined to 15 percent from 23 percent
over 197191, while that of non-Europeans quadrupled to 16 percent (see
Table 3.1 for details).
The ethnic profile continued to change during the 1990s; by 1996 the
foreign-born population rose to 5 million, or 17.4 percent of the population,
with a predominance of non-Europeans. It is worth noting that about 30
percent of the Canadian population reported a mixed ethnic background.
Roughly 85 percent of visible minorities are immigrants, with varying arrival
dates; about 90 percent reside in the large urban areas of Ontario, British
Columbia, Quebec, and Alberta. The foreign-born share is about 65 percent
among visible minorities with mixed backgrounds (e.g. Black and British,
Chinese, and French), and Southeast Asians other than Filipino and
Vietnamese (e.g. Japanese, and Korean). There is also considerable variation
in nativity status of white ethnic groups. Over 85 percent of British, French,
and Ukrainians are Canadian-born, but much smaller proportions are found
among Portuguese (13 percent), Spanish (17 percent), Balkan (29 percent),

Earnings differentials among ethnic groups in Canada 29


Table 3.1A Population by ethnic origins for selected years, Canada, 18711951
Ethnic group

1871

1881

1901

1911

1921

1931

1951

Total (000)

3,689

4,325

5,371

7,207

8,788

10,377

14,009

British
French

100.00
51.40

100.00
50.97

100.00
53.84

100.00
51.55

100.00
50.38

100.00
54.41

100.00
64.37

151.40

150.97

153.84

151.55

150.38

154.41

164.37

151.40

150.97

153.84

151.55

150.38

154.41

164.37

British and French


Mixed British/French
Mixed British/French/
Other
Some British/French
Total European

162.94

162.72

168.80

175.18

175.99

188.33

202.43

Not European
Not British/French

2.35
13.89

6.98
18.73

6.56
21.51

5.03
28.65

4.51
30.12

4.51
38.43

6.36
44.42

Not British/French/Eur
Austrian
Baltic
Belgian
Czech/Slovak
Dutch
Finnish
German
Greek
Hungarian
Italian
Jewish
Polish
Portuguese
Spanish
Roumanian
Russian
Scandinavian
Danish
Icelandic
Norwegian
Swedish
Other Scand.
Ukrainian
YugoslavlBalkan
Other European

11.54

11.75

14.95
0.36

23.63
1.10

0.10

0.24

1.10
0.08
10.14
0.01
0.05
0.35
0.53
0.21

1.40
0.39
10.09
0.09
0.29
1.15
1.91
0.84

25.61
2.21
0.04
0.42
0.18
2.41
0.44
6.05
0.12
0.27
1.37
2.59
1.10

33.92
0.90
0.11
0.51
0.56
2.77
0.82
8.80
0.18
0.75
1.82
2.91
2.70

38.06
0.48
0.53
0.52
0.95
3.94
0.65
9.24
0.21
0.90
2.27
2.71
3.28

0.01
0.65
1.01

0.15
1.11
2.82

0.28
2.06
3.44
0.43
0.33
1.41
1.26

0.54
1.64
4.24
0.63
0.36
1.73
1.51

0.35
1.36
4.22
0.64
0.35
1.78
1.46

1.01
0.19

2.82
1.89

4.18
0.30
0.17

5.89
0.32
0.25

Not European
Aboriginal
Canadian
Total Asian
East/SE Asian
Chinese
Filipino
Korean
Japanese

1.33

1.19

9.09
0.00

9.98

0.05
0.01

0.07
0.03

0.03
0.07

0.05
0.20

0.07

0.20

0.96

0.23

0.17

0.17

2.19
0.08
0.37

2.3
1.03

6.98
4.26

6.56
4.18

5.03
2.64

4.51
2.34

4.51
2.40

6.36
2.47

0.00

0.17
0.17
0.17

0.77
0.72
0.57

1.08
0.92
0.70

1.18
1.14
0.81

1.38
1.30
0.86

0.90
0.81
0.48

0.15

0.23

0.33

0.43

0.32

30 Morton A. Stelcner
Table 3.1A Continued
Ethnic group

1871

Vietnamese
Other E/SE Asian
South Asian
West Asian
Armenian
Iranian
Turk
Other West Asian
Other Asian
Arab
Black (exc Carib.)
Caribbean
Latin American
Other Not-European

1881

1901

1911

0.05
0.05

0.96

0.84

0.05
0.57

0.35

1.71

0.98

0.10
0.06

1921

0.04

1931

1951

0.09
0.09

0.03
0.06

0.10
0.10
0.42

0.04
0.17
0.38

0.19
0.38

0.18
0.27

0.78

0.44

0.18

2.54

Source: Statistics Canada, Various Censuses.


Note
0.00 = greater than 0 but less than 0.01.

Table 3.1B Population by ethnic origins for selected years, Canada, 18711951
Ethnic group

1871

1881

1901

1911

1921

1931

1951

Total (000)
British
French

3,689.26 4,325.81 5,371.32 7,206.64 8,787.95 10,376.79 14,009.43


2,232.04 2,548.51 3,063.20 3,999.08 4,868.74 5,381.07 6,709.69
1,147.17 1,298.93 1,649.37 2,061.72 2,452.74 2,927.99 4,319.17

British and French

3,379.21 3,847.44 4,712.57 6,060.80 7,321.48 8,309.06 11,028.85

Mixed British/French
Mixed British/French/
Other
Some British/French 3,379.21 3,847.44 4,712.57 6,060.80 7,321.48 8,309.06 11,028.85
Total European
Not European
Not British/French

3,636.81 4,146.90 5,170.52 7,005.58 8,568.58 10,134.31 13,582.57


52.45
310.05

177.91
477.37

200.79 201.06 219.37


242.47
426.86
658.75 1,145.84 1,466.47 2,067.73 2,980.58

Not British/French/Eur 257.60


Austrian
Baltic
Belgian
Czech/Slovak
Dutch
29.66
Finnish
German
202.99

299.46

457.96
10.95
2.99

30.41
254.32

33.85
2.50
310.50

944.78 1,247.10 1,825.25 2,553.72


44.04 107.67
48.64
32.23
1.97
5.88
35.26
9.66
20.23
27.59
35.15
8.84
30.40
63.96
55.96 117.51
148.96
264.27
15.50
21.49
43.89
43.75
403.42 294.64
473.54
620.00

Earnings differentials among ethnic groups in Canada 31


Table 3.1B Continued
Ethnic group
Greek
Hungarian
Italian
Jewish
Polish
Portuguese
Spanish
Roumanian
Russian
Scandinavian
Danish
Icelandic
Norwegian
Swedish
Other Scand.
Ukrainian
Yugoslav/Balkan
Other European

1871

1881

0.04
1.04
0.13

1.85
0.67

0.61
1.62

1.23
5.22

1.62

5.22

1901

1911

1921

1931

1951

0.29
1.55
10.83
16.13
6.29

3.61
11.65
45.96
76.20
33.65

5.74
13.18
66.77
126.20
53.40

9.44
40.58
98.17
156.73
145.50

13.97
60.46
152.25
181.67
219.85

0.35
19.83
31.04

5.88
44.38
112.68

13.47
100.06
167.36
21.12
15.88
68.86
61.50

29.06
88.15
228.05
34.12
19.38
93.24
81.31

23.60
91.28
283.02
42.67
23.31
119.27
97.78

31.04
5.68

112.68
75.43

225.11
16.17
9.39

395.04
21.40
16.58

21.52

5.76

5.17

6.76

106.72
3.91
17.95

Not European
52.45
Aboriginal
23.04
Canadian
Total Asian
0.00
East/SE Asian
Chinese
Filipino
Korean
Japanese
Vietnamese
Other E/SE Asian
South Asian
West Asian
Armenian
Iranian
Turk
Other West Asian
Other Asian
0.00
Arab
Black (exc Carib.)
21.50
Caribbean
Latin American
Other Not-European
7.91

177.91
108.55

200.79
127.94

201.06
105.61

219.37
113.72

242.47
128.89

426.86
165.61

4.38
4.38
4.38

23.73
22.05
17.31

43.21
36.90
27.83

57.63
55.46
39.59

74.48
69.86
46.52

60.53
54.19
32.53

4.74

9.07

15.87

23.34

21.66

1.68

2.34

21.39

1.68
17.44

3.97
3.88
16.99

2.18
8.28
18.29

4.62
10.07
19.46

4.19
12.30
18.02

43.59

30.00

31.36

21.44

9.58

170.40

Source: Statistics Canada, Various Censuses.


Note
0.00 = greater than 0 but less than 50.

2.15

32 Morton A. Stelcner
Table 3.1C Percentage distribution, 196191
Ethnic group

1961

1971

1981

1991

Total (000)

18,238

21,568

24,083

26,994

British
French

100.00
69.28

100.00
64.21

100.00
66.56

100.00
81.09

169.28

164.21

166.56

181.09

169.28

164.21

4.45
11.29
182.29

14.11
50.46
245.65

220.77

215.75

229.86

300.22

Not European
Not British/French

7.31
58.79

8.36
59.89

19.08
66.65

55.19
109.76

Not British/French/Eur

51.48

51.53

47.57

54.57

Austrian
Baltic
Belgian
Czech/Slovak
Dutch
Finnish
German
Greek
Hungarian
Italian
Jewish
Polish
Portuguese
Spanish
Roumanian
Russian
Scandinavian
Danish
Icelandic
Norwegian
Swedish
Other Scand.
Ukrainian
YugoslavlBalkan
Other European

1.33
0.80
0.77
0.91
5.37
0.74
13.13
0.71
1.58
5.63
2.17
4.05

0.55
1.49
4.83
1.07
0.38
1.86
1.52

0.44
0.64
0.53
0.85
4.43
0.62
13.69
1.29
1.37
7.59
3.09
3.29
1.01
0.29
0.28
0.67
4.00
0.79
0.29
1.86
1.06

5.92
0.86
0.64

6.03
1.09
0.35

0.42
0.52
0.44
0.70
4.22
0.54
11.81
1.60
1.20
7.73
2.73
2.63
1.94
0.55
0.23
0.51
2.92
0.60
0.24
1.06
0.81
0.22
5.47
1.33
0.06

0.36
0.52
0.41
0.78
4.72
0.52
12.00
1.99
1.33
9.88
3.24
3.59
3.25
1.09
0.38
0.50
2.30
0.54
0.19
0.83
0.57
0.17
5.35
1.73
0.64

Not European
Aboriginal
Canadian
Total Asian
East/SE Asian
Chinese
Filipino
Korean
Japanese

7.31
2.75

8.36
3.25

19.08
3.78

1.28
1.09
0.73

2.97
1.62
1.23

0.36

0.39

8.04
5.04
2.99
0.75
0.23
0.42

55.19
6.20
10.07
21.41
12.66
7.72
2.07
0.58
0.64

British and French


Mixed British/French
Mixed British/French/Other
Some British/French
Total European

Earnings differentials among ethnic groups in Canada 33


Table 3.1C Continued
Ethnic group

1981

1991

0.32
0.32
2.03
0.32
0.22
0.06
0.04
0.00

1.11
0.54
5.53
1.08
0.34
0.51
0.11
0.11

1.22

0.63
0.47
0.84
0.37
5.60

1.90
2.96
1.24
1.13
12.43

1961

1971

1981

1991

Total (000)

18,238.25

21,568.31

24,083.50

26,994.05

British
French

7,996.67
5,540.35

9,624.12
6,180.12

9,674.25
6,439.10

7,595.17
6,158.68

13,537.02

15,804.24

16,113.35

13,753.85

13,537.02

15,804.24

430.26
1,091.83
17,635.44

1,071.88
3,832.17
18,657.89

Vietnamese
Other E/SE Asian
South Asian
West Asian
Armenian
Iranian
Turk
Other West Asian
Other Asian
Arab
Black (exc Carib.)
Caribbean
Latin American
Other Not-European

1961

1971

0.10
0.08

0.64
0.71

0.10
0.24
0.40

0.64
0.28
0.36
0.29

2.63

Table 3.1D Distribution (000), 196191


Ethnic group

British and French


Mixed British/French
Mixed British/French/Other
Some British/French
Total European

17,653.86

20,763.92

22,237.64

22,802.23

Not European
Not British/French

584.38
4,701.23

804.39
5,764.08

1,845.86
6,448.06

4,191.82
8,336.15

Not British/French/Eur

4,116.85

4,959.69

4,602.20

4,144.33

106.54
64.37
61.38
73.06
429.68
59.44
1,049.60
56.48
126.22
450.35
173.34
323.52

42.12
61.53
51.14
81.87
425.95
59.22
1,317.20
124.48
131.89
730.82
296.95
316.43
96.98
27.52
27.38

40.63
50.30
43.00
67.70
408.24
52.32
1,142.37
154.36
116.40
747.97
264.02
254.49
188.10
53.55
22.48

27.13
39.61
31.48
59.13
358.18
39.23
911.56
151.15
100.73
750.06
245.84
272.81
246.89
82.68
28.65

Austrian
Baltic
Belgian
Czech/Slovak
Dutch
Finnish
German
Greek
Hungarian
Italian
Jewish
Polish
Portuguese
Spanish
Roumanian

43.81

34 Morton A. Stelcner
Table 3.1D Continued
Ethnic group
Russian
Scandinavian
Danish
Icelandic
Norwegian
Swedish
Other Scand.
Ukrainian
YugoslavlBalkan
Other European
Not European
Aboriginal
Canadian
Total Asian
East/SE Asian
Chinese
Filipino
Korean
Japanese
Vietnamese
Other E/SE Asian
South Asian
West Asian
Armenian
Iranian
Turk
Other West Asian
Other Asian
Arab
Black (exc Carib.)
Caribbean
Latin American
Other Not-European

1961

1971

1981

1991

119.17
386.53
85.47
30.62
148.68
121.76

64.48
384.79
75.73
27.91
179.29
101.87

473.34
68.59
51.45

580.66
104.96
33.37

49.43
282.80
57.94
22.76
102.74
78.36
21.01
529.62
129.08
5.38

38.22
174.37
40.64
14.56
63.03
43.35
12.80
406.65
131.44
48.56

584.38

804.39

1,845.86

4,191.82

220.12

312.76

365.92

102.38
87.35
58.20

285.54
156.08
118.82

29.16

37.26

6.77

67.93

777.44
487.43
289.25
72.63
22.10
40.99
31.36
31.11
196.38
31.21
21.16
5.60
4.16
0.30

470.62
765.10
1,626.50
961.23
586.65
157.25
44.10
48.60
84.01
40.64
420.30
81.66
26.01
38.92
8.53
8.22

8.25
19.37
32.13

61.54
26.67
34.45
28.03

210.38

116.96

60.69
45.22
81.51
36.05
541.48

144.05
224.62
94.40
85.54
944.33

Greek (30 percent), Italian (49 percent), and Polish (50 percent). Differing
arrival periods characterize these groups.

Multiculturalism and employment equity


Two major federal policies give explicit recognition to ethnic diversity in
Canada. First, the 1971 Multiculturalism within a Bilingual Framework Policy
and the subsequent 1988 Act for the Preservation and Enhancement of
Multiculturalism in Canada are designed to encourage members of all ethnic
groups to maintain and share their cultural heritage and language, and to
recognize and promote the understanding of cultural and racial diversity in
Canada. Second, the 1986 Employment Equity Act (strengthened by the 1995

Earnings differentials among ethnic groups in Canada 35


Act) addressed labor market disadvantages (such as, hiring, occupational
segregation, and earnings) of four designated groups by aiming to achieve
equality in the workplace with accommodation of difference.3
Prior to 1986, ethnic-specific information in the publicly available Census
micro data was restricted to European origin groups, Blacks, Chinese and
Aboriginals. The term visible minorities, first appeared in the 1986 Census
Public Use Data Base (released in 1990), and then in the 1991 Census Public
Use Micro File (released in 1994).
Ethnicity in the Census is based on self-identification obtained from
responses to the following: to which ethnic or cultural group(s) did this
persons ancestors belong? It must be emphasized that the Census did not ask
individuals to identify themselves by race or color. At the same time, however, the 1986 Employment Equity Act forced the need to collect data on
groups that are distinctive by virtue of their visibility, race or colour.
Information on race was collected for the first time in the (mid-decade) 1996
Census. The data on visible minority membership in both the 1986 and 1991
Census do not reflect self-designation by respondents.
Visible minority membership in the 1986 and 1991 Census data is based on a
derived visible minority indicator. This constructed measure is obtained
mainly from responses to ancestral origin that are cross-classified against
other self-reported cultural information such as birthplace, mother tongue
and religion. As a result, ethnic origin data may differ in interesting ways from
the derived visible minority indicator. For example, a person could selfidentify a single ethnic origin of British, Dutch, or Greek and still be coded as a
visible minority. Similarly, a Latin American can be coded as a visible minority
or white. Table 3A.1 shows (p. 36) that the visible minority category contains
one multiple-origin and ten single-origin ethnic groups.

Review of research
Employment equity initiatives sparked much research interest in assessing
whether observed wage differences among various groups reflected discrimination. The large number of studies commonly use the Blinder (1973)Oaxaca
(1973) method to decompose the difference in observed earnings into two
components: (1) an endowments or explained portion that is due to group
differences in measured wage-generating characteristics and (2) a coefficients
or unexplained residual portion that is attributable to differences in returns
for the same characteristics. The residual is conventionally interpreted as
earnings discrimination.
The greatest attention has been paid to the gender earnings gap.4 By
contrast, only a handful of studies consider disparities between persons with
and without disabilities.5 Since Canada has two official languages (English and
French), there is also a sizeable body of research on the effects of language on
earnings and other economic outcomes.6
A growing body of research focuses directly on analyzing earnings

36 Morton A. Stelcner
differentials between whites (not-visibles), visible minorities (visibles),
and Aboriginals. The studies reveal much variance in the estimates of ethnic
earnings discrimination. This is partly due to the usual differences in data
sources, sample definitions, the choice of the dependent variable, controls
used in the earnings regressions, and statistical methodology. In evaluating
the empirical findings it is also important to recognize the limitations of the
method that is used to estimate discrimination.7 A major drawback is that little
is known about the structure of opportunities to enhance earnings capacity
prior to labor market entry. There is also inadequate information about
unobserved and often unmeasured traits such as an individuals value system
(tastes), cognitive and affective skills, ability, and motivation. The conventional discrimination measure is not immune to biases in different directions
because of the included or omitted variables problem. The former measure
can under-estimate discrimination to the extent that earnings-determining
characteristics reflect indirect discriminatory effects of pre-market factors,
which are taken as given and controlled for in the regressions. The discrimination estimate may be over-stated because of omitted or badly measured
productivity-enhancing characteristics.
In addition, there are other considerations underlying differences in the
findings: the treatment of immigration status, the extent of aggregation of
individual ethnic groups, the handling of multiple ethnic origins, and the
choice of the no-discrimination benchmark earnings structure. Most studies
fail to indicate the levels of statistical significance (e.g. standard errors) of the
discrimination estimates.
Group 1: no distinction between Canadian-born and immigrants
An early study by Kuo (1976) used 196970 survey data to analyze the
earnings gaps between whites and three male Aboriginal groups (North
American Indian, Eskimo, and Mtis) in the Mackenzie District of Northern
Canada. The gross gaps were: Indian, 84 percent, Eskimo, 66 percent, and
Mtis, 53 percent. Kuo found that 848 percent of the observed gaps could be
attributed to productivity-related characteristics.
Patrinos and Sakellariou (1992) examined the earnings differential between
male (North American) Indians and non-Indians using 1986 Labor Market
Activity Survey (LMAS) data. Indians faced a gross shortfall of 23 percent; 60
percent could not be explained by background attributes.
George and Kuhn (1994) used the 1986 Census to decompose the earnings
gap between whites and Aboriginals, separately for men and women. The
gross earnings shortfall of single-origin Aboriginal men was 24 percent, of
which 4158 percent was unexplained. For mixed-origin men, the shortfall was
14 percent, with an unexplained portion of 3951 percent. Single-origin
Aboriginal women earned 17 percent less than white women, where 4653
percent could not be explained. The raw gap of mixed-origin women was
9 percent with the unexplained portion being 2637 percent.

Earnings differentials among ethnic groups in Canada 37


Wannell and Caron (1994) used data from the 1992 National Graduates
Survey (NGS) to examine earnings of 1990 post-secondary graduates for
Aboriginals, visible minorities and Whites (combined male and female
samples). Since their sample comprises recent post-secondary, it is perhaps
not surprising that they found the observed average earnings of the three
groups to be about the same; the decomposition of the small gaps indicated an
absence earnings discrimination.
Kuhn and Sweetman (1998) used the 1991 Census to analyze the white
Aboriginal earnings gap, separately for men and women. Single-origin
Aboriginal men faced a gross wage gap of 25 percent of which 5264 percent
was due to background characteristics. The gross differential for multipleorigin Aboriginal men was only 8 percent, one-half of which was due to
endowment differences. The gross earnings gap of single-origin women was 12
percent, 92 percent of which reflected discrimination. Multiple-origin women
had a relatively small wage gap of 3 percent, one-third of which could not be
explained.
DeSilva (1999) also used the 1991 Census to analyze gender-specific white
Aboriginal earnings differentials. For the combined groups of Aboriginal men
the gross earnings shortfall was 34 percent; 3843 percent could not be
explained. Single-origin Aboriginal men had a gap of 56 percent, with an
unexplained portion of 3445 percent. Multiple-origin men faced a wage gap
of 33 percent with discriminatory effects of 2330 percent. With regard to
women, the earnings gap of all Aboriginals was 23 percent, with 32 percent
attributable to discrimination. In the case of single-origin women, the earnings
gap was 28 percent, with an unexplained portion of 1835 percent. Multipleorigin women had a disadvantage of 15 percent, with a discrimination portion
of 4051 percent.
Group 2: Separate analysis for immigrants and non-immigrants
Studies not based on 1991 Census data
Boyd (1992) applied multiple classification analysis to 1986 Census data in
examining earnings differences across an assortment of white and visible
minority groups, separately by nativity status and gender. Reitz and Breton
(1994) repeated Boyds analysis with a sharper focus on visible minorities and
a broader set of control variables.
Discriminatory effects in Boyd were reflected by the net ratio: the
standardized earnings of each ethnic group divided by the overall Canadian
average. For broadly defined groups of Canadian-born whites and visibles,
neither ethnic group enjoyed earnings advantages; the net ratio was almost the
same for white and visible minority men (102 and 98, respectively) as was the
case for their female counterparts (101 and 103, respectively). With regard to
foreign-born whites and visibles, the net ratio was 98 for white men and 80 for
visible minority men. The corresponding values for women were 99 and 89.

38 Morton A. Stelcner
Immigrant visible minority men thus faced an earnings disadvantage of 20
percent, while immigrant visible minority women had an earnings loss of 11
percent.
A different story emerged when detailed immigrant ethnic groups were
considered. Most foreign-born white groups earned about the same as the
overall average, but there were some exceptions. Greek immigrant men
had a disadvantage of 12 percent, while a premium was enjoyed by British
(12 percent), Jews (10 percent), and Scandinavians (6 percent). Among
immigrant white women, there was a small earnings loss for Dutch, East
European, and Portuguese (34 percent), while an advantage was enjoyed by
French (8 percent), Croatians (4 percent), and Jews (3 percent). Considering
immigrant visible minority men, Filipinos had a 21 percent shortfall, followed
by Blacks (12 percent), South-East Asian and visible minority British (11
percent each) and Chinese (10 percent). Only West Asian immigrant women
had a noticeable penalty of 13 percent, while Chinese women enjoyed a slight
premium of 2 percent.
Reitz and Breton (1994) compared the earnings of all whites to several
other origins. Among the Canadian-born, a statistically significant discrimination portion was reported for the following groups: Aboriginal men (738
percent of the 0.37 gross gap), Black men (54 percent of the 0.24 raw gap), and
Aboriginal women (78 percent of the 0.23 gross gap). Canadian-born women
of Multiple/Other origins earned 3 percent more than their white counterparts
of which 3367 percent was due to their background attributes.
For immigrant men and women, most of the earnings disadvantage of
visible minority groups (relative to white immigrants) could be explained by
productivity attributes. Among immigrant men, Blacks faced a gross gap of 26
percent, and a net gap of 1722 percent. Similarly, East/South-East Asian men
had a gross gap of 21 percent, and a net shortfall of 1721 percent. For South
and West Asians, the gross gap (11 percent) and net gaps (1213 percent) were
about the same. Among immigrant women, Black women earned 5 percent
more than white women, an advantage almost entirely due to their productivity characteristics. Similarly, the earnings of East/South-East Asians were 4
percent higher than white women, while their standardized earnings were 57
percent higher. Immigrant women of Multiple/Other visible origins also had
an earnings advantage of 5 percent, but the net gap was not statistically
significant. South and West Asian women had a gross earnings disadvantage
of 6 percent, while the net disadvantage was 1013 percent.
Hum and Simpson (1999) employed data from the 1993 Survey of Labour
and Income Dynamics to analyze earnings differences between whites and six
visible minority groups: Blacks, Indo-Pakistani, Chinese, Non-Chinese
Orientals (Koreans, Japanese, Filipinos, and South-East Asians), Arabs, and
Latin Americans. Native-born and immigrants were considered separately, as
were men and women. The reference group was that of whites.
First, they considered the pooled samples of native- and foreign-born

Earnings differentials among ethnic groups in Canada 39


Canadians with controls for immigration status. When a single categorical
variable was used for visible minority status, the estimates showed a 14 percent
disadvantage for men and a 7 percent shortfall for women. When specific subgroups of visible minorities were considered, the results for men showed
significant disadvantages for four groups: Blacks, 19 percent; Non-Chinese
Orientals, 16 percent; Indo-Pakistani, 13 percent; and Chinese, 12 percent.
The significant estimates for women are Chinese and Indo-Pakistani, 9 percent
and 3 percent, respectively.
The authors repeated the exercise for separate samples of Canadian-born
and immigrants. For Canadian-born men and women, visible minority
membership did not have significant effects on earnings, with one exception:
Canadian-born Black men faced a substantial earnings penalty of 24 percent.
With regard to immigrants, the combined group of visible minority men faced
a shortfall of 15 percent, but only four sub-groups of immigrant men had a
wage disadvantage: Non-Chinese Orientals, 23 percent; Blacks, 21 percent;
Indo-Chinese, 16 percent; and Pakistani 15 percent. Among immigrant women,
only Non-Chinese Orientals suffered a wage disadvantage of 13 percent.
Studies that use the 1991 Census
DeSilva and Dougherty (1996) examined the earnings gap between (1)
combined native-born and immigrant samples of white and visible minority
men and (2) between Canadian-born visibles and whites. The respective gross
gaps were 26.9 percent and 3.5 percent. The decompositions of these gaps
showed that for the combined samples about 15 percent was due to endowment differences, while for the native-born sample 6585 percent could be
explained by observable characteristics.
Swidinsky (1997) decomposed the earnings gaps between broadly defined
groups of whites and visibles, as well as between whites and four ethnic groups:
Blacks; Chinese; South Asians; and South-East Asians. The analysis differentiated between men and women and between native-born and immigrants.
For the two broad groups of whites and visibles and combined nativitystatus samples (with controls for immigration status), the gross earnings gap
for men was 0.199 and the net gap was 0.057, so that 30 percent was explained
by endowment differences. The gross and net gaps of women were small (1.3
percent and 2.5 percent, respectively).
The samples of whites and visibles were then stratified by nativity status.
The white-visible gross gap for Canadian-born men was 16 percent, of which
57 percent was due to background characteristics. Canadian-born visible
minority women had about the same gross and net earnings advantage (about
5 percent). For immigrant men, the white-visible gross differential was
31 percent, with an endowments portion of 57 percent. For immigrant women
the gross difference was 5 percent, with an endowments component of 36
percent.

40 Morton A. Stelcner
There was much variation in the results of the four ethnic groups differentiated by nativity status. Among Canadian-born men, Blacks faced the largest
gross earnings disadvantage (0.339) and the largest net shortfall (0.183), so
that 54 percent was due to characteristics. South-East Asian men earned more
than their white counterparts, with a gross earnings advantage of 0.054, and
would have earned even more as indicated by their net gap of 0.078. Among
Canadian-born women, Blacks faced a gross gap of 0.035 and a net gap of
0.013, so that 36 percent was due to characteristics. South Asian women earned
about 10 percent less than their white counterparts, and 81 percent was due to
characteristics. Chinese women earn 20 percent more, but after controlling for
characteristics they would have earned 15 percent less. For South-East Asian
women the gross and net earnings ratios were about the same.
Turning to immigrant groups, only 36 percent of the gross gap (0.356) of
Black men could be explained by work-related characteristics. Chinese men
faced a 0.267 gross gap, with an endowments portion of 72 percent; South-East
Asian men had a 0.407 gap and 68 percent was due to characteristics, while the
gross gap of South Asians was 0.196 and 60 percent reflected endowment
differences. The earnings shortfall among women was smaller than among
men. The gross, net gaps and endowments portions were: Blacks (0.027,
0.044, 164 percent), Chinese (0.022, 0.042, 190 percent), South Asian
(0.056. 0.026, 46 percent), and South-East Asian (0.072, 0.032, 45 percent).
A comparison of the gross gap (0.027) and the net gap (0.044) of Black
immigrant women indicated that they would earn more than white immigrant
women. However, the same comparison for Chinese immigrant women (0.022
and 0.042) suggested that they would earn less, indicating that they received an
unexplained premium.
Baker and Benjamin (1997) analyzed the male earnings gaps of native-born
Aboriginals and four visible minorities: Blacks; Chinese; South Asians; and
South-East Asians. They used the earnings norm of a somewhat unusually
defined group of white men, namely, a residual category that comprised all
ethnic groups excluded in the preceding visible minority groups; this reference
included visible minorities such as (visible) Latin American, Arabs and
West Asians. First, they compared combined immigrant and native born
samples of whites and visible groups; then they considered separate samples
differentiated by nativity status. Their estimates of discrimination varied
with the scope of statistical controls (e.g. home language, marital status, and
occupation).
The upper and lower limits of their (statistically significant) estimates were
as follows. For the pooled nativity-status samples, the gross earnings gap was
largest among South-East Asians (0.270), followed by Blacks (0.254),
Aboriginal (0.187), Chinese (0.169), and South Asian (0.165). The minimum
and maximum values of the endowment component were: South-East Asian
(36 percent and 49 percent); Blacks (9 percent and 17 percent); Aboriginal
(4555 percent); Chinese (16 percent and 72 percent), and South Asian (38
percent to 16 percent).

Earnings differentials among ethnic groups in Canada 41


Among the Canadian-born, the gross gap and the range of the endowment
portion were: Blacks (0.293, 25 percent and 42 percent); Chinese (0.193,
2270 percent); South Asian (0.536, 1959 percent); and Aboriginal (0.179,
4953 percent). The raw gap of South-East Asian (0.022) was not statistically
significant. The corresponding results for immigrants were: Blacks (0.312,
1631 percent); Chinese (0.232, 2381 percent); South Asian (0.188, 1249
percent); and South-East Asian (0.396, 2164 percent).
Pendakur and Pendakur (1998b) analyzed ethnic earnings differentials
using two methods. They found that among Canadian-born men, the raw
differential was 0.208 for visibles and 0.348 for Aboriginals, while the
respective net gaps were 0.124 and 0.222, so that the unexplained portion was
40 percent for visibles and 36 percent for Aboriginals. With regard to
immigrant men, visible minorities earned 25 percent less than native-born
whites; 62 percent of this shortfall could not be explained. Immigrant whites
earned about 10 percent more than their Canadian-born counterparts, but
after controlling for characteristics, they earned 11 percent less.
The gross and net earnings gaps between Canadian-born white and visible
minority women were negligible (1.3 percent and 0.5 percent, respectively).
The gross gap of Aboriginal women was 19 percent, of which 35 percent could
be attributed to characteristics. Immigrant white and Canadian-born white
women earned the same: the gross and net gaps were 0.018 and 0.006. The
earnings gap between foreign-born visible minority and native-born white
women was 10.5 percent; only 18 percent could be explained by characteristics.
The authors also estimated earnings discrimination by using dummy
variables. Among Canadian-born men, earnings penalties were reported
for Greek men (15 percent); Balkan men (11 percent); and single-origin
Aboriginals (23 percent); as well as for men of mixed Aboriginal plus white
origins (16 percent). Among Canadian-born women, earnings penalties were
borne by Greek women (15 percent) and women of mixed Aboriginal plus
white origins (17 percent). For Canadian-born visible minority groups, they
found significant earnings disadvantages for Black (17 percent) and Chinese
men (12 percent).
A very different pattern of results emerged when immigrants were considered. Among white immigrants, there was a significant earnings gap only
for Spanish women (16 percent). For men, Greek immigrants faced a penalty
of 17 percent, while a group of immigrant men who identified themselves as
Canadian had a shortfall of 12 percent. With regard to visible minorities,
most immigrant men faced large and significant earnings penalties; the
exception was foreign-born Chinese men. The penalty among men ranged
from 14 percent to 22 percent, with the largest shortfall borne by Blacks (22
percent), followed by a gap of about 20 percent for Latin Americans and men
of mixed visible with white origins. There was a shortfall of 1819 percent for
Vietnamese, West Asian, and multiple visible with visible origins. The
smallest disadvantage (about 15 percent) was faced by four groups of men:
Arab, South Asian, and other visible, and visible with British origins. The

42 Morton A. Stelcner
results for visible minority immigrant women showed that five groups faced an
earnings penalty: Vietnamese (15 percent); Blacks (12 percent); West Asian
(10 percent); mixed visible with white origins (12 percent); and mixed visible
with visible origins (11 percent).
Group 3: studies that use statistical controls for immigration status
Kuch and Haessal (1979), in perhaps the first Canada-wide study of the
subject, used 1971 Census data to examine earnings differences across several
white male ethnic groups (British; French; North European; East European;
Italian; and Jewish), two non-white groups (Oriental and Native Indian),
and a residual category called Other and Unknown. There were too few
observations to consider Blacks. Using standardized deviations from the
overall geometric mean, they found that Jewish men enjoyed a substantial
unexplained premium (46 percent), as did Orientals (13 percent); British
(5 percent); and East Europeans (4 percent). The largest net earnings
shortfall was suffered by Native Indians (23 percent), followed by French and
Other (7 percent each) and Italian (3 percent).
Stelcner and Kyriazis (1995) used the 1981 Census to analyze earnings
differences across a large array of male and female white (single-origin
European) ethnic groups, but owing to data limitations in the Census their
analysis included only two visible minority groups (Blacks and Chinese); these
problems also precluded the consideration of Aboriginals. Using the earnings
structure of workers of British origin as the benchmark, their main findings
were that the standardized or net earnings of most white ethnic groups were
similar to those of British. There were some important exceptions. The
standardized earnings of Portuguese, Chinese and Italian men were less than
their actual earnings, so that these groups enjoy an unexplained premium of 59
percent, 17 percent, and 9 percent, respectively. By contrast, Black men faced
a gross earnings disadvantage of 18 percent of which 83 percent could be not
be explained. The gross earnings gap among women was smaller than among
men. The decomposition results for women revealed that 55 percent of the
BritishBlack gap (0.132) could not be attributed to characteristics. For the
remaining ethnic groups, the difference between actual and standardized
earnings was small.
Howland and Sakellariou (1993) used the 1986 Census to investigate the
gender-specific earnings gap between all whites (single-origin Europeans)
and Blacks, South Asians and South-East Asians. Almost all of the 22 percent
gross earnings disadvantage of Black men could not be explained by
endowment differences. South Asian men had gross earnings shortfall of 2.8
percent, but a net earnings advantage of 2 percent. For South-East Asians,
only 36 percent of the 17 percent gross gap could be explained. The results for
women were somewhat different. The gross earnings gap of about 4 percent
was about the same for South Asian and South-East Asian women, but the

Earnings differentials among ethnic groups in Canada 43


explained portions were 97 percent and 32 percent, respectively. Black women
earned about 5 percent less than white women, but had a net earnings
advantage of just over 1 percent.
In a more recent study, Stelcner and Shapiro (1999) used the 1991 Census to
analyze ethnic earnings differentials among 37 white, visible minority and
Aboriginal ethnic groups, separately for men and women. They address three
important inter-related issues in assessing ethnic earnings discrimination.
First, the 1991 Census revealed that 29 percent of the total population and 32
percent of the Canadian-born population reported a mixed ethnic background.
Given the percentages, it would be inappropriate to exclude them from the
analysis or to add multiple responses to single responses. Separate categories
were established for multiple ethnic origins.
Second, the issue of ethnic heterogeneity in the labor market was explicitly
raised in the Abella Report (Abella 1984: 46): Although it is unquestionably
true that many non-whites face employment discrimination, the degree to which
different minorities suffer employment and economic disadvantages varies
significantly by group and by region. Stelcner and Shapiro (1999) addressed
this issue by considering the variation in earnings across thirty-seven separate
groups.
Third, the choice of a benchmark group is critical; rather than arbitrarily
choosing a benchmark group, Stelcner and Shapiro follow Oaxaca and
Ransom (1994) and used the earnings structure of the pooled sample of all
groups as the non-discriminatory norm. Also, to gauge whether discrimination
estimates varied with the choice of the non-discriminatory norm they used the
earnings structure of the all whites to analyze the earnings gaps of Aboriginals
and visible minorities. Their main findings are now examined.

Results for men


Earnings of the aggregate group of white workers were about 3 percent higher
than the national average, compared to 15 percent less for the visible minority
group. The gross earnings gap was small (less than 3 percent) for Spanish,
mixed British plus French, Polish, Italian, and Multiple (white) origins.
Several white sub-groups enjoyed higher than average earnings: Balkan and
German, Hungarian and Ukrainian (57 percent); Canadian, British, and
Other European (911 percent); Other Single Origins (15 percent); and Other
West European origins (17 percent). Jewish men earned a remarkable 35
percent more. Four groups of whites, on the other hand, had significant
earnings deficits: Latin American (30 percent); Greek (28 percent); Portuguese (10 percent); and French (6 percent).
The raw earnings gap also varied among Aboriginal groups. Those with
multiple origins earned 24 percent less than the national average, while singleorigin Aboriginal men earned a massive 85 percent less. The gross earnings
disadvantage among individual visible minorities also showed variation. At

44 Morton A. Stelcner
the low end were Chinese with 8 percent less, followed by South Asians (9
percent); Other EastSouth-East Asians (10 percent); and Multiple origins
(15 percent). In the mid-range of 1820 percent were Arabs; Filipinos; West
Asians; and Other Single origins. Black men faced a deficit of 23 percent;
Vietnamese and (visible) Latin Americans had the largest shortfalls of 34
percent and 40 percent, respectively.
Discriminatory effects were small or not statistically significant for most
individual white ethnic groups, but there were notable exceptions. The
discrimination component accounted for about 60 percent of the earnings
disadvantage of Greek men and 33 percent of Latin American men.
Substantial positive discrimination effects (nepotism) were present for
Portuguese; the excess of the standardized earnings gap (24 percent) over the
gross gap (10 percent) indicates that they enjoyed higher than national
average returns to productivity characteristics.
Two-thirds of the raw earnings disadvantage of both single- and mixedorigin Aboriginal men could be attributed to productivity characteristics.
About two-thirds of the gross gaps (85 percent and 24 percent, respectively) of
these groups could be explained by their lesser endowments of work-related
traits.
With regard to visible minority groups, most of the estimated discriminatory
differentials were statistically significant. For the combined group of visible
minorities, discrimination accounted for 57 percent of the raw earnings gap. If
this group were paid according to the pooled earnings structure, the earnings
shortfall would decrease from 15 percent to 7 percent.
The statistically significant discrimination portion of specific groups varied
considerably from a low of 32 percent for Latin Americans to 110 percent for
Other EastSouth-East Asian. In most cases, the earnings of individual visible
groups would increase if they were paid according the pooled earnings
structure. The net earnings gap would largely disappear for Chinese; Filipino;
Other South-East Asian; and South Asian. However, the remaining sub-groups
would still face a net earnings shortfall: Latin Americans (28 percent); Arabs
(12 percent); Blacks (11 percent); and Multiple Visible (8 percent).

Results for women


The pattern of ethnic earnings differentials was very different for women than
for men. The raw earnings gap was trivial (less than 1 percent) for the
combined group of whites (89 percent of the sample) and the aggregate group
of visibles (9 percent of the sample). However, there were interesting
differences across the detailed ethnic groups.
Mixed British and French and Multiple White origins earned about the
same as the national average. Groups with above average included British,
Other West European, and Canadian (46 percent); Italian, Polish, Spanish,
Ukrainian, and Other European (78 percent); Balkan (12 percent); Other

Earnings differentials among ethnic groups in Canada 45


Single origins (16 percent) and, as was the case for men, a substantial 30
percent for Jewish women. Groups with below-average earnings were French,
German, and Portuguese (46 percent); Hungarian and Greek (78 percent);
Dutch (11 percent); and White Latin American (27 percent).
Aboriginal women, like their male counterparts, faced an earnings deficit:
19 percent for those with multiple origins, and a remarkable 51 percent for
women with a single origin. The pattern of earnings disparities of visible
minority women differed from that of their male counterparts. Women with
Multiple Visible and Other EastSouth-East Asian origins earned about the
national average, as well as the average of all white women. Three groups
of visible minority women earned more than the national average (or the
average of all whites): Blacks (4 percent); Chinese (8 percent); and Filipino
(18 percent); while five groups faced gross earnings shortfalls: South Asian
(8 percent); Arab (12 percent); West Asian (13 percent); Vietnamese (20
percent); and Latin American (24 percent).
Decomposition results for women in white ethnic groups
Discrimination estimates were not significant for most white ethnic groups,
with some exceptions. If Hungarian women were paid according to the pooled
earnings structure, their observed earnings deficit of 7 percent would become
an earnings advantage of 4 percent. Like their male counterparts, discrimination effects were present for Greek and Latin American women: 67 percent
and 51 percent, respectively.
Decomposition results for Aboriginal and visible minority women
Discrimination accounted for only 12 percent of the raw gap of single-origin
Aboriginal women and for 28 percent for those with mixed origins. This
indicates that, as was the case for Aboriginal men, there was little difference
between their gross and standardized earnings disadvantage.
The pattern of results for individual groups of visible minority women
differed from that of their male counterparts. Significant discrimination
effects were found for only five groups. Filipino women earned 18 percent
more than the national average, but would have earned 26 percent more had
they been paid according to the pooled earnings norm. The unexplained
residual accounted for 33 percent of the gross gap for Latin Americans,
while for Arab and Vietnamese women it was about 40 percent of the
gross gap. Chinese women enjoyed a premium of 3 percent, representing
one-third of their gross earnings advantage. For the remaining groups,
discrimination effects were not statistically significant. The study also
conducted sensitivity tests to see if the discrimination estimates varied
with the choice of the non-discriminatory pay structure (see 1999 paper
for details).

46 Morton A. Stelcner

Conclusions
This chapter has presented an overview Canadian research findings on ethnic
earnings differences. The estimates of earnings discrimination vary widely and
in several instances are even incongruous.
Differences in empirical methodology contributed to the variance in the
findings in this chapter, yet it appears that the intertwined effects of ethnicity
and immigration status, coupled with the choice of the benchmark earnings
structure, play an important role in understanding the different empirical
results. While most studies give due recognition to the interplay of ethnicity
and immigration, the effects of ethnicity (in terms of detailed groups) and
nativity status remain confounded because small sample sizes continue to
hinder Canadian research on the topic.
The review of the empirical findings in this chapter suggests a number of
general conclusions about estimating earnings discrimination across ethnic
groups. First, white sub-groups are sufficiently heterogeneous, so that combining them into one category of whites and using their earnings structure as
a benchmark is problematic. Sufficient evidence suggests that some white
groups are disadvantaged, while others are favored. Second, the groups
comprising visible minorities also differ among themselves and combining
them in one visible minority category may be misleading in ascertaining
the extent and incidence of earnings discrimination. Compelling evidence
supports the idea that earnings discrimination was by no means uniform across
visible minority sub-groups. Third, due consideration must also be given to
multiple ethnic origins among whites, Aboriginals, and visible minorities.
Fourth, discrimination estimates for the visible minority groups can be
sensitive to choice of the earnings norm, either that of all ethnic groups
(whites, visibles, and Aboriginals) or of the combined group of whites.
Discrimination estimates based on the pooled sample method tended to be
much smaller than those yielded by using the earnings structure of the
combined group of whites.
The set of Canadian empirical results suggests that the precision of the
customary estimates of ethnic earnings discrimination in Canada (and elsewhere) must be interpreted with care in the light of ethnic heterogeneity,
immigration effects, and the choice of the no-discrimination benchmark.
At the policy level, it seems advisable to take heed of these considerations in
designing, implementing and evaluating the impact of policies that combat
labor market discrimination.

Appendix
Table 3A.1 Ethnic origins, definitions
Not visible
Single origins
British

English, Irish, Scottish, Welsh, other British, n.i.e.

Earnings differentials among ethnic groups in Canada 47


Balkan

Albanian, Bulgarian, Croatian, Macedonian, Serbian,


Slovenian, Yugoslav, n.i.e.

Canadian
Dutch (Netherlands)
French
Acadian, French, French Canadian, Franco-Manitoban,
Franco-Ontarian, Qubcois
German
Greek
Hungarian (Magyar)
Italian
Jewish
Latin American
Argentinian, Brazilian, Chilean, Colombian, Ecuadorian,
Guatemalan, Hispanic, Mexican, Nicaraguan, Peruvian,
Salvadorean, Uruguayan, Other Latin, Central and South
American, n.i.e.
Polish
Portuguese
Spanish
Ukrainian
Other European
Baltic (Estonian, Latvian, Lithuanian), Finnish, Danish,
Icelandic, Norwegian, Swedish, Other Scandinavian, n.i.e.,
Byelorussian, Czech and Slovak, Roma (Gypsy), Roumanian,
Russian, Cypriot, Maltese, Basque, Other Europe, n.i.e.
Other W. European Austrian, Belgian, Flemish, Luxembourg, Swiss
Other single origins
Origins not included elsewhere (e.g. American, Australian/
New Zealander)
Multiple origins
British and French only
Combinations of above (e.g. Dutch and German, French and
Italian)
Visible minorities
Single origins
Arab
Black/Caribbean
Chinese
Filipino
Latin American

South Asian
Vietnamese
West Asian
E./South-East Asian
Other single origins

Egyptian, Iraqi, Lebanese, Mahgrebian, Palestinian, Syrian,


Arab, n.i.e.
Black, Ghanaian, African Black, n.i.e., Barbadian, Cuban,
Guyanese, Haitian, Jamaican, Trinidadian and Tobagonian,
West Indian, Other Caribbean, n.i.e.
Argentinian, Brazilian, Chilean, Colombian, Ecuadorian,
Guatemalan, Hispanic, Mexican, Nicaraguan, Peruvian,
Salvadorean, Uruguayan, Other Latin, Central and South
American, n.i.e.
Bengali, Punjabi, Singhalese, Tamil, Bangladeshi, n.i.e., East
Indian, n.i.e., Pakistani, n.i.e., Sri Lankan, n.i.e.
Afghan, Armenian, Iranian, Israeli, Kurdish, Turkish, West
Asian, n.i.e.
Burmese, Cambodian, Indonesian, Japanese, Korean,
Laotian, Malay, Mongolian, Thai, Tibetan, Other Asian,
n.i.e.
Origins not included elsewhere (e.g. Ethiopian, Somali,
Other African, n.i.e., Fijian, Polynesian, Other Pacific
Islanders)

48 Morton A. Stelcner
Multiple origins
Aboriginal peoples
Single origins
Multiple origins

Combinations of above (e.g. Chinese and Black, British and


South Asian)
North American Indian, Inuit
Combinations of above (e.g. Mtis, North American Indian
or Inuit plus other)

Source: Statistics Canada (1992).


Note
n.i.e. = not included elsewhere.

Notes
1 For aspects of immigration and ethnic populations in Canada, see, Beaujot
(1991); Driedger (1996); Green and Green (1999); McVey and Kalbach (1995).
2 The ethnic profile comprises more than 100 distinct ethnic groups. Although
immigration levels have fluctuated widely throughout Canadian history, since
1950 the proportion of foreign-born in the population hovered around 16 percent,
rising to 17.4 percent in 1996. By comparison, in the early 1990s the ratio was 8
percent in the US, 8.4 percent in Germany, 6.4 percent in France, and 3.5 percent
in Britain.
3 According to the 1991 Census the designated groups constituted about two-thirds
of the Canadian labor force: women, 45.9 percent; visible minorities 9.1 percent;
Aboriginal peoples 3.0 percent, and (from The 1994 Annual Employment Equity
Report) persons with disabilities 6.5 percent.
4 See for example: Miller (1987); Shapiro and Stelcner (1987); Baker et al. (1995);
Kidd and Shannon (1996); Gunderson (1998); Chaykowski and Powell (1999a,
1999b).
5 See: Breslaw and Stelcner (1987); Harkness (1993); Hum and Simpson (1996);
Maki (1993).
6 Research on language and earnings includes Christofides and Swidinsky (1994);
Shapiro and Stelcner (1997); Vaillancourt (1997); Breton (1998); Pendakur and
Pendakur (1998a).
7 The issues are discussed in detail by Shapiro and Stelcner (1987).

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69, Ottawa.

Understanding recent empirical


evidence on race and labor market
outcomes in the USA*
Patrick L. Mason

Introduction
The sentiment against Black men appears, unfortunately, to be well
earned, and it is difficult to believe that many competent Black workers
are being denied opportunity.
(Mead 1992: 114, quoted in Petterson 1998: 761)
[T]he worldview of Blacks make them uniquely prone to attitudes
contrary to work, and thus vulnerable to poverty and dependence.
(Mead 1992: 14851, quoted in Petterson 1998: 759)
Racial inequality remains a substantial problem in American society.
Competing explanations for this inequality, especially African American
white differences, often overlap but they are often also quite contentious.
Recent studies on the role of race and labor market outcomes provide an
excellent example of both consensus and contention. For example, there is a
strong consensus that racial wage inequality declined sharply for nearly a
decade after the passage of the Civil Rights Act of 1965. Further, it is accepted
that there were multiple causes of this decline: strong economic growth and a
tight labor market, great improvements in the quantity and quality of African
American education relative to whites, and strong anti-discrimination and
affirmative action enforcement. Collectively, these forces contributed to a
rapid reduction in the residual wage differential between the mid-1960s and
mid-1970s that is, the fraction of the African American white wage
differential that cannot be explained by differences in individual attributes
such as education and experience. The reduction in the residual wage was
accepted as a sign that labor market discrimination was on the decline.
There is also a consensus that this phase gave way to a slowdown in the
movement toward racial wage equality in the mid-1970s. In fact, an expansion
of the residual wage differential set in some time during the 197981 interval.
However, explanations of the slowdown and eventual expansion of the racial
wage differential are a source of great disagreement. For example, Darity and
Mason (1998) conclude that African Americans receive a 15 percent wage
penalty and nearly half of the raw wage differential is caused by racial discrimi-

Race and labor market outcomes in the USA 53


nation. James Heckman (1998) argues that labor market discrimination is no
longer an important issue in the American economy; the slowdown and
expansion in racial wage inequality since the mid-1970s is due to an increasing
rate of return to cognitive ability that has increased general inequality, not
discrimination. Loury (1998) argues that although labor market discrimination remains a minor problem, economists have not paid sufficient attention
to supply-side inequities that are responsible for producing racial disparities
in productivity-linked characteristics prior to entering the labor market.
This chapter will review some of the recent empirical research that attempts
to explain the slowdown and expansion in racial wage inequality.

Triumph of the market?


A careful reading of the entire body of available evidence confirms that
most of the disparity in earnings between blacks and whites in the labor
market of the 1990s is due to the differences in skills they bring to the
market, and not to discrimination within the labor market . . . [L]abor
market discrimination is no longer a first-order quantitative problem in
American society.
(Heckman 1998: 101)
For James Heckman, todays racial inequality persists despite the meritocratic
influences of the market and the federal governments anti-discrimination
activity during the eras of the Civil Rights and Black Power movements, 1954
65 and 196573, respectively. African Americans are paid less because their
laboring activity is worth less, because they come to the market with deficient
skills. Lawrence Mead claims that the source of deficient skills is African
American culture. Herrnstein and Charles Murray (1994) argue that the
source of deficient skills among African Americans (and low-wage whites) is
lower intelligence, that is, African Americans have lower genetic ability than
whites. The point of agreement among these social analysts is that African
Americans are inferior. The only conflict among them concerns the sources
and extent of African American inferiority.
Proponents of the labor-quality hypothesis argue that dramatic increases in
the rate of return to educational quality (cognitive ability) are responsible for
the increasing earnings inequality that has characterized the American
economy since 1980. It is then argued that the distribution of cognitive skills is
determined by a number of pre-market factors and processes, such as family
structure and values, the quality of ones neighborhood during an individuals
formative years, inherited ability, the quality of schools attended, and so forth.
It is not often acknowledged that racial differences in educational quality have
exhibited a substantial downward trend prior to and during the period of
increasing racial wage inequality. Instead, labor-quality proponents steadfastly assert that African Americans have a relatively inferior set of pre-market
skill accumulation factors.

54 Patrick L. Mason
The presumed inferiority of African Americans pre-market skill accumulation factors are explained by discrimination in pre-market activities and
institutions, cultural differences across racial groups, or alleged racial differences in genetic inheritance. Nevertheless, since pre-market factors, processes,
and institutions are largely immune to market competition, there are no
economic forces acting to equalize these variables across racial groups.
Hence, it is concluded that the slowdown and eventual deterioration in interracial wage equality since the mid-1970s has occurred because a host of premarket factors are responsible for trapping the average African American in
the lower half of the white skill distribution. Presumably, the increase in the
price of skill has been sufficiently dramatic to magnify the declining interracial skills gap into an increasing racial wage gap.
We may use a standard individual wage equation to illustrate our discussion. Consider (4.1), where X is a vector of productive attributes, such as
experience, job tenure, and education, and other wage determinants, such
as union status, region of the country, and residential location, and R is a
dichotomous variable such that R = 1 if the individual is African American
and 0 if the individual is white:
ln(wage) = 0 + iX i + r R + .

(4.1)

In a wide variety of studies and over a long period of time, economists find
consistently that 0.10 < r < 0.20. Since the gross or unadjusted African
Americanwhite male wage ratio is about 0.70, this coefficient implies that
one-third to two-thirds of the earnings gap is due to race-specific factors. For
many years, racial discrimination was assumed to be the primary reason
behind the unexplained or residual racial wage gap.
The labor-quality proponents (for example, see Neal and Johnson 1996)
would explain r < 0 by claiming that African Americans have a lower quality
of labor (provide less skilled labor) than observationally equal white workers.
This research suggests that r < 0 because of omitted variable bias. The
traditional human capital variables (years of education in particular, but also
experience and job tenure) do not fully capture presumed white superiority in
labor quality.
Equation (4.2) presents the labor-quality hypothesis in its most general
form. Earnings are positively correlated with unobserved ability (t > 0),
which is unequally distributed across racial groups. After controlling for
unobserved ability, labor-quality proponents argue that race has no independent influence on earnings (r = 0):
ln(wage) = 0 + iX i + r R + tUnobserved Ability + .

(4.2)

Herrnstein and Murray (1994) use the Armed Forces Qualification Test
(AFQT) from the National Longitudinal Survey of Youth to substantiate their
claims regarding the socio-economic impact of racial differences in genetic

Race and labor market outcomes in the USA 55


ability. For most other labor-quality proponents, differences in AFQT scores
also indicate differences in the quality of productive attributes. However, the
AFQT represents an index of otherwise unobserved skills learned at home, in
school, in ones neighborhood, or perhaps even purchased in the market.
Regardless of the ultimate source of inter-racial differences in pre-labor
market unobserved skills biology, pre-labor market discrimination, or
culture labor-quality theorists all claim to demonstrate that after adjusting
for differences in test scores inter-racial differences in wage rates become
inconsequential.
There are economists who do not share Heckmans evaluation of the
literature on the economics of discrimination, or Meads and Herrnstein and
Murrays faith in white supremacy (that is, black inferiority). Rather than the
AFQT, Murnane, Willet, and Levy (1995) used mathematics, reading, and
vocabulary test scores from examinations administered to high-school seniors
as proxy variables for pre-labor market differences in unobserved ability. They
do find that an increasing rate of return to cognitive skill is an important
explanatory variable for the 1980s increase in intra-racial wage inequality (0 <
t,1978 < t,1986). They do not find that the increasing rate of return to ability can
explain the rise in inter-racial wage inequality during this period (0 > r,1978 >
r,1986). If both racial discrimination and the rate of return to skill increased
during the period of their study (197886), then it is possible that an increasing
rate of return to cognitive ability may explain more of the intra-racial rise in
inequality than it does of the inter-racial rise in inequality.
There is the additional issue of the appropriateness of AFQT scores as
proxy for cognitive skills. Currie and Thomas (1995) alert us that neither the
AFQT nor the more expansive examination from which it is derived, the
Armed Services Vocational Aptitude Battery (ASVAB), is a racially unbiased
proxy variable for pre-labor market inputs that might be expected to increase
productive ability. They find that the influence of maternal education, maternal cognitive ability, and family income on a childs cognitive skill development
varies by race and by the age of the child. Hence, if raw AFQT or ASVAB
scores are inserted into a wage equation, such as (4.2), they may produce
misleading results. Indeed, when Currie and Thomas plot womens wages
against AFQT they find that African Americans obtain higher wages for any
given level of AFQT. Given the racially distinct weights assigned to determinants of skill, it is reasonable to infer that there is systematic bias in the test
score that is negatively correlated with being an African American. Neither
the AFQT nor the ASVAB score captures the effect on family and school
inputs equally across racial groups.
Rodgers and Spriggs (1996b) also find that AFQT scores predict wages less
well for African Americans than whites; and there are significant differences
in the ability of common predictors to estimate African American and white
AFQT scores. Rodgers and Spriggs further show that when the math and
verbal components of the AFQT are used to predict wages, instead of the
composite score, the coefficients on the verbal components are positive and

56 Patrick L. Mason
significant for African Americans, while the coefficient on the math component is basically zero. The relationships for whites are exactly the opposite. To
the extent that there actually is an inter-racial skills gap, inter-racial
differences in AFQT scores severely over-estimate this gap. Because there are
substantive inter-racial differences in how family (and other so-called premarket) environments are captured by the AFQT, racial differences in
AFQT scores are greater than racial differences in skills rewarded in the labor
market.
Utilizing a measurement bias-corrected AFQT score (T) as a proxy of
unobserved ability (4.3), Rodgers and Spriggs (1996b) do find that cognitive
skill has a positive correlation with the wage rate, i.e. t > 0. However, the
magnitude of r is approximately 0.15 with or without the inclusion of T in the
wage equation:
ln(wage) = 0 + i X i + r R + tT + .

(4.3)

Beyond the fact of measurement bias in AFQT scores, there may be


unobservable skills that are not proxied by the AFQT and that are larger for
African Americans than whites. Mason (1997) and Goldsmith, Veum, and
Darity (1997) address this issue. These studies explore the inter-relationships
among race, culture (psychology), and skill acquisition. If racism is a reality of
American life, then we should expect to find that African Americans must
work harder or perform better in order to obtain the same educational or labor
market outcome as whites. Whether this is a real or only perceived condition,
it may have very interesting effects on individual behavior through its impact
on group culture. For example, parents, community leaders, or other leaders
for a group whose median standard of living is below the national average will
impart to younger generations the knowledge that catching up to the national
average requires that individual group members put forward supra-normal
levels of effort in skill accumulation and have larger amounts of psychological
capital. To the extent that educational effort is positively correlated with work
effort and that work effort and psychological capital are components of skill,
measured inter-racial inequality may under-estimate the true extent of
discrimination.
Mason (1995, 1999a) and Rodgers and Armentrout (1996) provide insight
into the nature of the discriminatory process. Examining the changes in wage
rates between 1986 and 1993, Rodgers and Armentrout (1996) estimate the
following fixed-effects model:
ln(wage) = 1X + t AFQT + Training + ,

(4.4)

where Training = 1 if the individual participated in a training program


between 1986 and 1993, but 0 otherwise; and 2 represents the growth in the
price of skill from 1986 to 1993.
Rodgers and Armentrout find that, The market value of cognitive skills

Race and labor market outcomes in the USA 57


only rises for white men [who did not participate in a training program
between 1986 and 1993] and black women. However, when error-corrected
AFQT scores are used there is no increase in the price of cognitive skill for
African American women. They are also able to demonstrate that training
provides whites with an additional 6.710.7 percent payoff over the premium
African Americans receive for training. This additional white gain is due to
higher white payoffs for actual experience and formal training. Because
Rodgers and Armentrout explicitly control for ability, the racial differential in
the return to training (and experience) provides prima facie evidence of racial
discrimination in the face of competitive markets.
Mason (1999a) estimates the following equation:
ln(wage) = 0 + i X i + 1(percent white male) + 2(percent white
(4.5)
female) + r R + t IQ + e,
where IQ represents the score on a sentence completion test and the X vector
includes a large number of variables related to the individuals socio-economic
and family background. For white males, I find that 1,w > 0 and 2,w > 0. That is
to say, for white males, individual wage rates are positively correlated with the
fraction of the laborforce that is white. For African American males, I find that
individual wage rates increase as the fraction of the occupation which is white
male increases (1, A > 0).
On other hand, the percentage of white females in the workforce has no
impact on the wage rate of African American men (2, A = 0). Finally, despite
the presence of the cognitive skill variable (IQ), an exceptional number of
socio-economic and family background variables, and the segregation
variables, I also find that 0.17 < r < 0.07. (The upper bound is produced
by OLS estimation, while the lower bound is produced by random effects
estimation.) So, just as Mason (1995) predicts, job segregation reduces the
probability of an African American getting into a high-wage job and, given
that an African American has obtained any job, 2868 percent of the interracial wage gap is due to discrimination.
Bratsberg and Terrell (1998) examine the impact of tenure and experience
on racial wage differentials. They find no racial difference in the rate of return
to tenure; however, African Americans receive a lower rate of return to either
actual or potential labor market experience. For African Americans, but not
for whites, there is a statistically significant difference between actual and
potential experience. Bratsberg and Terrell suggest three explanations for
these results. (1) Changes in the legal environment encouraged employers to
substitute forms of discrimination. The advent of affirmative action (and antidiscrimination laws) has encouraged employers to substitute on-the-job
training for higher wages for white workers. (2) Employee discrimination
declines with tenure. Specifically, the value of currently employed African
American workers increases with tenure as white worker disutility of working
with African American workers declines over time. (3) Employers obtain

58 Patrick L. Mason
more accurate information regarding the quality of employees as tenure
increases; accordingly, incorrect perceptions of differences in worker ability
across racial groups decline over time.
Analyzing a National Longitudinal Survey of Youth (NLSY) sample of
young men Oettinger (1996) finds that although there is no racial wage gap at
labor force entry, a gap does develop over time. The gap emerges because
African Americans receive a lower rate of return to experience and smaller
gains to job mobility than whites. But Oettinger also finds an equal rate of
return to tenure and equal wage growth during periods of no job change.
Recent research on the industrial and occupational attainment processes
helps to explain African Americans lower rate of return to experience. For
example, Fairlie and Sundstrom (1999) show that the current racial unemployment ratio is substantially higher than it has been in past generations, and that
this ratio increased during the 1980s. Today, the African Americanwhite
unemployment ratio is more than 2:1 but prior to 1940 there was unemployment equity. The recent rise in the unemployment ratio has occurred because
the demand for labor has shifted away from industries, geographic areas,
and skill levels where African Americans have been heavily concentrated,
especially among younger and less well-educated workers (Bound and Holzer
1993; Fairlie and Sundstrom 1999: 264; Mason 2001).
During the period since 1970, relative educational gains among African
Americans has slowed the expansion of the racial unemployment ratio even as
the unexplained component remains large and works in the direction of
widening the gap substantially after 1970 (Fairlie and Sundstrom 1999: 264).
Stratton (1993) also reports that only 2040 percent of the African American
white male unemployment differential can be explained by observed characteristics. We know also from audit studies that employment discrimination
degrades the market opportunities of African Americans and Latinos relative
to white workers. African Americans and Latinos have less chance of getting
their job applications accepted, have lower probabilities of obtaining a job
interview if their application is accepted, and have a lower probability of being
offered a job if interviewed.1
Petterson (1998) demonstrates that the higher unemployment rate for
young African Americans relative to young whites is not due to correspondingly higher reservation wages among African Americans. Replicating the
influential study of Holzer (1998), Petterson also finds a racial difference in
reservation wages. In his sample of young men, Petterson finds that African
American reservation wages exceed those of whites by 213 percent. But he
does not find a relationship between the reservation wages of young workers
and subsequent spells of unemployment. Hence, there is no evidence that
racial differences in reservation wages can explain the racial employment gap.
All other things equal, Mason (1995) predicts that larger firms are more
likely to engage in employment discrimination than smaller firms. Holzer
(1998) reports that previous studies found that African Americans were
indeed over-represented in smaller firms in the mid-1960s, but they are under-

Race and labor market outcomes in the USA 59


represented in smaller firms today. Holzer concludes that smaller firms are
more likely to engage in racial employment discrimination than larger firms
are. Holzer suggests that the positive relationship between relative African
American employment and firm size occurs because all other things are
not equal. Specifically, larger firms have greater exposure to government
monitoring and corrective action, they are more likely to use formal rather
than subjective hiring procedures and have greater exposure to public censure
if they engage in discriminatory behavior.
Black (1995) shows that in a monopsonistic labor market with both
prejudiced and unprejudiced firms and workers who engage in sequential job
search, African Americans will have higher job-search costs than whites since
visits to prejudiced firms are without value to African American workers.
Since a firms monopsony power increases with the cost of job search, groups
with the highest job-search cost will be offered jobs with the lowest wage and
worst non-wage job attributes.
In Blacks model white workers earn an identical wage regardless of
whether they work at a prejudiced or unprejudiced firm. However, prejudiced
firms engage in employment discrimination against African American workers,
while unprejudiced firms engage in wage discrimination against African
American workers.2
As predicted by his job-search theory, Black found that white workers
systematically receive higher wage offers than African Americans (Table 4.1).
Workers with above-average skills are more likely to be offered jobs with
above-average pay. Black also finds that African American workers are, ceteris
paribus, less likely to be offered jobs with above-average pay. When education,
occupational experience, and age are added to the model, the response
coefficient for African Americans increases from 0.46 to 0.41 and it remains
statistically significant at the 2 percent level.
Table 4.1 Probability that a worker is offered an above-average wage
Variables

Coefficient

Constant

1.368
(14.18)
0.920
(9.52)
0.165
(0.60)
0.460
(2.73)
0.013
(0.16)
0.070
(0.50)

Worker has above-average skills


Worker has below-average skills
Worker is black
Worker is female
Worker is from a nonblack, nonwhite ethnic group
Source: Black (1995: 319).
Note
t-statistics are given in parentheses.

60 Patrick L. Mason

Pre-market factors and racial wage inequality


Loury (1977) has argued that an individuals social capital, or family and
community background, yields nontradable social relations and cultural attributes that influence economic well-being. For Loury, social capital is a vital
element for inter-generational transmission of socio-economic status. But the
nontradability of social capital implies that equal quantities of observed
individual attributes will not yield identical rates of returns and, if social
capital differs by race, racial inequality will be transmitted from one generation to the next in perpetuity.
Samuel Bowles (1972) argued more than a generation ago that class is an
important determinant of individual education and earnings. Similarly,
Granovetters (1988) job network analysis demonstrates that individual
economic attainment is related to the extent of ones connections to individuals embedded in positions of power and authority in the marketplace.
Persons from high socio-economic status backgrounds will have more
accessible and more varied connections to the set of individuals embedded in
positions of power and authority. In a race- and class-segregated society such
as the USA the impact of embeddeness on individual economic outcomes will
be larger among whites than among African Americans.
Equations (4.6) and (4.7) summarize a narrow interpretation of Lourys
social capital hypothesis. This interpretation preserves a meritocratic ideology
of the market even as it allows so-called pre-market activity to be decidedly
non-meritocratic. Individual human capital accumulation (H) is a function of
individual attributes (A), parental socio-economic status (F), racial or ethnic
group socio-economic status (R), and the socio-economic status of ones
neighborhood (N). In turn, individual earnings (W), as well as other labor
market outcomes, are functions of individual human capital:
H = h(A, F, R, N), and

(4.6)

W = w(H).

(4.7)

Bowles model of inequality (equations (4.8) and (4.9)) suggests that human
capital accumulation reflects class position (C). Additionally, class is a direct
determinant of labor market outcomes:
H = h(C), and

(4.8)

W = w(H, C).

(4.9)

The broad interpretation of Lourys social capital hypothesis substitutes socioeconomic status for class but preserves Bowles analytical structure. Hence,
we have:
H = h(A, F, R, N), and

(4.10)

Race and labor market outcomes in the USA 61


W = w(H, A, F, R, N).

(4.11)

Equations (4.6) and (4.10) are identical, while (4.7) is a special case of
(4.11). However, neoclassical empirical studies have not employed the broad
interpretation of social capital as an interpretative strategy. Yet such studies
are clearly conformable with both the broad and narrow interpretations of
social capital.
For example, Borjas (1992, 1995) has empirically examined the impact
of parental socio-economic status and social capital on inter-generational
mobility, where social capital consists of neighborhood and white ethnic
group socioe-conomic status. Borjas (1992) demonstrates that both fathers
socio-economic status and the average socio-economic status of an individuals ethnic group have a sizeable impact on individual educational
attainment, occupational attainment, and hourly wage rate. After controlling
for individual attributes, Borjas (1992) finds that fathers education (parental
capital) and ethnic groups education (ethnic capital) have a convergence
coefficient of 0.48 with offsprings education in the General Social Survey
(GSS) and 0.38 in the NLSY.3 However, parental capital alone has a
convergence coefficient of 0.27 in both datasets. In the GSS, parental and
ethnic capital have a convergence coefficient of 0.57 with occupational status,
while the convergence coefficient is 0.60 with individual wage rates in the
NLSY. For individual wage rates, parental capital alone has coefficients of
0.20 and 0.35, for the GSS and NLSY, respectively.
Borjas (1992) did not include African Americans in his statistical analysis.
Instead, he performed a simulation that assumed African Americans had an
inter-generational mobility process similar to whites. The simulation suggests
that including ethnic (or in this case racial) capital under-predicts educational
attainment in the NLSY, though it is more accurate in the GSS dataset.
Including racial capital may improve the prediction of African American
occupational attainment, but the standard error is quite large. Including
African American racial capital does not yield more accurate predictions of
the African American hourly wage rate. African Americans may have lower
levels of racial capital than whites, but Borjas (1992) results indicate that
African American racial capital may have very little effect on African American inter-generational mobility. It would appear that African Americans face
a more meritocratic marketplace than whites.
Borjas (1995) shows that so-called ethnic capital is not simply a proxy for
the socio-economic status of the neighborhood where an individual was raised.
The mean status of an ethnic group is an excellent proxy for neighborhood
socio-economic status; nevertheless, ethnic capital has an independent impact
on inter-generational mobility when children are exposed frequently to other
persons who share the same ethnic background (1995: 366). The rate of mean
convergence increases with the extent of neighborhood segregation that
is, the impact of ethnic capital on inter-generational mobility increases as
the extent of segregation increases. However, as the extent of segregation

62 Patrick L. Mason
increases the impact of parental status on inter-generational mobility declines.
As the neighborhood becomes more segregated, group influence increases
relative to the impact of parental status on individual socio-economic status.
Ethnic inequality among whites then will persist from generation to
generation. In a completely meritocratic economy individual socio-economic
status would be related solely to individual attributes and natural ability. In
Borjas (1995) theoretical model, parental, neighborhood, and ethnic group
socio-economic status increase individual human capital accumulation. So,
although non-market processes may not be meritocratic, competitive markets
remain meritocratic since each person is rewarded in proportion to his/her
human capital. Yet, there is nothing in Borjas (1995) empirical analysis that
rules out the broad interpretation of social capital. Hence, an equally valid
interpretation is that Borjas research indicates that among whites parental,
neighborhood, and ethnic socio-economic status will substantially retard the
operation of any meritocratic tendencies within the US economy. Class effects
constrain the meritocratic elements of the market competition. Regardless of
whether one applies a broad or narrow interpretation of the social capital
hypothesis, socially and economically segregated neighborhoods are an
important institutional mechanism for the transmission of inequality across
generations.
Darity, Dietrich, and Guilkey (1997, 2001) provide innovative researches
on the impact of race on inter-generational mobility. In 1880 the human
capital characteristics of African American men reduced their occupational
status by nearly 30 percent relative to the average male. On the other hand,
differential treatment in the market that is, the rate of return to African
American human capital lowered African American occupational status by
31 percent. By 1910 the reduction in occupational status due to deficient
human capital was just 19 percent, despite the rise and consolidation of Jim
Crow during the years 18801910 (Table 4.2). Yet the impact of market
discrimination increased from 31 to 44 percent during this same period.
Darity, Dietrich, and Guilkey explain that:
Decreasing losses associated with deficient characteristics tracks well with
the sharp rise in black male literacy, while increasing losses attributable to
disadvantageous returns to characteristics track well with the hardening
of Jim Crow practices in the US South. This may suggest evidence of a
simple pattern of endogenous discrimination: as blacks became harder to
exclude from preferential employment and status positions on grounds of
qualifications, outright exclusion intensified.
(1997: 304)
Darity, Dietrich, and Guilkey (2001) assess whether group occupational
status in 1880, 1900 and 1910 has an impact on individual occupational status
in 1980 and 1990. At the turn of the century African American men attained
lower occupational status because of market discrimination and lower human

Race and labor market outcomes in the USA 63


Table 4.2 Duncan Index of occupational status for African American men,
18801990

Characteristics
Rate of return

1880

1900

1910

1980

1990

0.297
0.312

0.224
0.385

0.185
0.439

0.148
0.165

0.110
0.139

Source: Darity, Dietrich, and Guilkey (1997).

capital characteristics. The lower human capital characteristics among


African American males was directly related to slavery and the rise and
consolidation of Jim Crow in the South, where 90 percent of all African
Americans resided at late as 1910. Darity, Dietrich, and Guilkey (1997) show
that the effect of both market discrimination and human capital deficits
continued to have a negative impact on the occupational status of African
American males 100 years later. Of course, some white men had human
capital characteristics similar to those of African Americans at the turn of the
century, however they also received market premiums that they were able to
pass on to their ethnic descendants some four generations later. Current
generations of whites continue to benefit from past racism, while current
generations of African Americans are harmed by it.
In an inter-city comparison of socio-economic outcomes for individuals
ages 204 and 2530, Cutler and Glaeser (1997) find that residential racial
segregation decreases earnings of African Americans and increases the
probability of becoming a single parent. They find also that racial segregation
lowers the probability that an African American will graduate from high
school or obtain employment. Empirically, they find that a 13 percent
reduction in residential segregation will eliminate one-third of the racial gap
in these areas. Curiously, they find that segregation has no impact on the
socio-economic status of whites.
Taken at face value, the Cutler and Glaeser (1997) results are consistent
with the labor-quality argument that racial inequality persists because of
something fundamentally internal to the culture of African Americans that
reproduces intergenerational inequality.4 However, we have seen already that
Mason (1997) and Goldsmith, Veum, and Darity (1997) present evidence of a
positive relationship between African American culture and individual wage
rates and educational attainment. Further evidence is also provided by Mason
(1999b) which examines the relative impact of family values (or behaviors)
and family socio-economic status (or class). I find that regardless of race or
sex, family behavior is substantially less important for determining socioeconomic status than family class background. As a rule, childhood family
socio-economic status explains twice as much of the variation in socioeconomic outcomes among individuals of a particular racesex group as
childhood family values.
Additionally, inter-racial differences in family values have very little impact

64 Patrick L. Mason
on the residual difference in wages and hours of employment. Racial differences in class background, however, can explain up to 60 percent of the
residual wage differential and up to 20 percent of the hours of employment
differential. I am unable to determine whether the class effect on the residual
wage and employment differences occurs because of the narrow or broad
social capital hypothesis. Mason (1999b) also confirms an earlier finding:
African Americans are able to translate a given amount of sources into a
higher level of educational attainment than an otherwise identical white
individual. Hence an alternative interpretation of the Cutler and Glaeser
(1997) results is that inter-city variations in racial segregation are an indicator
of inter-city differences in market and non-market discrimination against
African Americans. In this light, a reduction in segregation increases the wellbeing of African Americans because it indicates a reduction in the extent of
discrimination.
Cutler and Glaeser (1997) do find that travel time to work is an avenue
through which segregation works to reproduce racial inequality. Specifically,
travel time to work lowers earnings and increases idleness among African
Americans but has no impact on whites. Zax and Kain (1996) report a similar
finding. They find that residential segregation increases the probability that an
African American employee will be forced to quit when her/his employer
moves from downtown Detroit to suburban Dearborn. Specifically, white
employees who faced an increase in commuting distance were more likely to
move and no more likely to quit than white employees whose commuting
distance declined. An increase in commuting distance combined with residential segregation forced 11 percent of African Americans to quit their
employment.
Finally, given the importance of educational quality for the neoclassical
argument that an increasing rate of return to cognitive ability has been the
driving force for increasing racial inequality, it is instructive to see whether
poor-quality schools have been an important transmission mechanism for
racial inequality during the 1980s. Grogger (1996) finds that school quality is
not an important factor in the recent inter-racial wage trend. Specifically,
Grogger (1996) finds that controlling for the student/teacher ratio, length of
the school term, teacher education, school size, and percentage of African
American students enrolled in the school, both individually and collectively,
does not reduce the African American wage penalty. Grogger (1996) also
shows that the quality of schools attended by African Americans in the 1970s
was not dramatically different from the quality of schools attended by whites
(except for the African American fraction) and that the rates of return to
school quality were of modest magnitude.5

Discussion
Tight labor markets and government anti-discrimination and affirmative
action policies, along with rapid improvement in the quality and quantity of

Race and labor market outcomes in the USA 65


African American education relative to white education, brought about a
reduction of inter-racial inequality and racial discrimination in the labor
market between 1945 and 1973. Although both the quality and quantity of
African American education has continued to improve relative to whites
(Bernstein 1995), especially during the 1970s and 1980s when inter-racial
wage inequality begin to expand, macroeconomic and public policy changes
have contributed to an environment that encourages racial discrimination in
the labor market. According to Leonard (1991: 105), affirmative action
under the contract compliance program virtually ceased to exist in all but
name after 1980s. Leonard provides rather strong evidence that the federal
government emasculated the Office of Federal Contract Compliance
Program, the enforcement vehicle for affirmative action within the federal
government. Leonard writes that by the mid-1980s affirmative action no
longer aided blacks. Along with Anderson (1996) and Leonard (1996),
Rodgers and Spriggs (1996a) find that federal enforcement activities declined
substantially in the 1980s with the advent of the Reagan administration.
Accordingly, they find that contractor status made a greater contribution to
firms relative employment of non-white workers after the Reagan years
than contractor status made during Reagans control of the federal antidiscrimination and affirmative action machinery.
The stagflation of 19745 and stagnation of 19802 spurred greater competition for income among all workers, hence generating greater incentives
for employer and employee discrimination. The bargaining power and
standard of living of production and non-supervisory employees declined.
Working-class white males pushed down the economic ladder by these
macroeconomic disruptions and changes in the industrial structure dislodged
African American workers from lower-wage positions (Mason, 1995, 1999a;
Darity and Myers 1999). Moreover, the continuing decline of organized labor,
especially in the private sector, has contributed to both intra- and inter-racial
wage inequality (Mason 2001). Mason (2000) reports that African American
white wage inequality began to expand at least half a decade before the rate of
return to skill began to increase. The racial wage differential began to grow
after 1973, but the rate of return to cognitive ability did not begin to increase
after 1979. So the rising skill premium cannot be a cause of the increasing
racial wage inequality.
The notion that competition will eliminate discrimination within the labor
market is little more than conservative political ideology masquerading as
science. In fact, both orthodox and heterodox economists have fashioned
theories of persistent racial discrimination where material incentives and
opportunities to engage in discrimination are directly attributable to the
operation of the competitive process. In addition, several studies present
strong empirical evidence of discrimination within the labor market. The most
sophisticated studies that claim to show no discrimination within the labor
market rely on a single test score variable (the AFQT) within one dataset.
However, the AFQT over-estimates African Americanwhite skill differences;

66 Patrick L. Mason
its predictions have not been replicated by studies that employ different
measures of cognitive skills, and it yields inconsistent and counter-intuitive
results when decomposed into its component parts.
So-called pre-labor market factors, which may also be summarized as the
class and cultural background of individuals, do have an impact individual
well-being and inter-generational mobility. Racial inequality from 100 years
ago affects individual labor market outcomes today (Darity, Dietrich, and
Guilkey 1997, 2001). Among whites, parental status and ethnic group status
has a strong direct impact on inter-generational mobility (Borjas 1992, 1995).
Children of high-income and high-education parents, neighborhoods, and
white ethnic groups have a leg up on other children in attaining high income
and an advanced education. However, we are unable to distinguish the manner
in which class background matters. Is it because superior class position creates
an advantage in skill acquisition or is it because superior social status increases
access to persons embedded in positions of power and authority?
The supply of and demand for labor are not strictly separable phenomena.
To the extent that class background influences skill acquisition and provides
access to decision makers and persons with control over resources, then class
simultaneously affects both the demand for and supply of laboring activity.
Hence empirical research that finds that a meaningful fraction of the racial
wage gap can be explained by racial differences in class background does not
lessen the substantive significance of race for labor market outcomes. What
such research would suggest is that the class effect on labor demand is one
avenue through which white preferential treatment in the labor market is
obtained. This, however, is an area where we need greater study.
Public policies and political action to eliminate racial discrimination within
the labor market and within society at large must be distinct elements of an
overall egalitarian political economy. Redistributing household wealth and
public resources so as to reduce class inequality will as a by-product reduce
some racial discrimination in the labor market and some racial inequality in
society. However, a persistent and aggressive race-specific political agenda
must also be utilized to eliminate the material incentives to discriminate that
are embedded in the job-competition process.
Finally, there is a curiosity concerning the theoretical and empirical
research on race and economic processes. Regardless of the market under
examination for example, labor, entrepreneurial, housing, health, or other
major economic market or the methodological approach, economists have
not sought to examine the formation of racial identity.6 All discrimination
studies start with the assumptions that racial identity is given and that there is a
uniformly agreed-to racial category for each individual, regardless of who
does the racial sorting. Yet, I am unaware of any modern economist who
utilizes a biological theory of racial identity. Without actually saying the
words, economic research holds that race is a social construction. It is doubtful
whether we can have such a large-scale social construction that does not have
an economic explanation for its existence. Research on the economics of

Race and labor market outcomes in the USA 67


identity would take us a long way toward understanding the material basis of
racial conflict in American and other societies.

Notes
* The editorial and substantive comments of Sandy Darity and Ashwini Deshpande
greatly improved the quality of this chapter.
1 See Darity and Mason (1998) for a more detailed summary of this literature.
2 The significant innovations of Blacks model should not be overlooked. Connecting employer prejudices to worker search costs shows how preferences matter.
Emphasizing the connection between worker search costs and the monopsony
power of firms demonstrates that exploitation (wage less than marginal product
of labor) in general and discrimination in particular, is profitable to firms.
3 A convergence coefficient of 1.00 indicates that individuals obtain the precise
social status of their father and ethnic group.
4 The R2 statistic in the major OLS regressions are unusually low. For example, the
R2 statistics in the high-school graduate and college-graduate equations are 0.034
and 0.093, respectively, for 204-year-old individuals. For the ln(earnings)
equation the R2 is 0.09, while it is 0.05 for the idle ( persons not working and not in
school) equation. Finally, for the equation that predicts single mother status, the
R2 is just 0.108.
5 Grogger (1996) does find that school quality has a positive effect on wages. In
particular, he finds very strong school fixed effects. But controlling for these fixed
effects increased rather than reduced the racial wage penalty.
6 Darity, Mason, and Stewart (1998) and Akerlof and Kranton (1998) are working
papers that have sought to fill this void.

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Brookings Institute.
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504.

If not reconciliation, then what?


Race and the stolen generation
in Australia
Samuel L. Myers, Jr.

Introduction
This chapter summarizes lessons learned from studying racial reconciliation
in Australia for several months in 1997 and shares some insights about what it
could mean for future efforts in the USA to solve its race problems through
an Australian form of racial reconciliation (Salmond 1991; Council for
Aboriginal Reconciliation 1994f; Council for Aboriginal Reconciliation
1994h). This chapter thus synthesizes two very different threads of thought:
one about optimism that racial reconciliation will be successful in Australia
and the second about ambivalence on how the Australian reconciliation
process might be transferred to the US situation. Emphasis will be on the
Australian reconciliation effort.
The first section presents the empirical context of the problem of racial
inequality in Australia. The second section reviews the theoretical context
within which one can understand the Australian reconciliation process.1 The
concept of white privilege is described and the context that views a USA that
has pretty much run out of new ideas and viable strategies for remedying racial
and ethnic economic inequality is explained. The context is one in which
racism is apparently on the rise, where racial hate is deepening (Berkowitz
1999; Clayton 1999; Hate Crimes June 4 2001), and where there is a decisive
retrenchment or moving away from the conventional civil rights approaches to
remedying racial economic inequality (Myers 1997a, 1997b).
The third section discusses qualitative findings obtained from talking with
an important group of Aboriginal and white intellectuals inside and outside
Australian universities. There is no claim that this group is representative
of Australian perspectives generally, nor even of Australian intellectuals
and academics specifically, but the group does represent perhaps the bestinformed and most consciously supportive group of the educational aspirations of Aboriginal and Torres Strait Islander peoples. One gains a sense of at
least one boundary of thought. If the most supportive constituency rejects
particular processes or means for achieving racial equality, then those
processes or means will be very difficult to implement. Analysis of the results

If not reconciliation, then what? 71


of a survey of views about racial reconciliation provides a tentative positioning
of where Australia is, and where it might go.
The fourth section imparts some very personal insights about what it was
like to be an African American living and working in Australia. These
thoughts are far more tentative and perhaps more unscientific than the survey
or even the theoretical framework set up in the first two sections, but valuable
nonetheless. Any understanding of the prospects of transferring an Australian
style of racial reconciliation to American society requires that a researcher
hold up a mirror to him/herself as the recorder and interpreter of events.
The fifth section draws some conclusions.

Racial inequality in Australia


On every conceivable measure of social and economic status, Australian
Indigenous are worse off than the general population in Australia. On
measures of health, Indigenous infants are 44.4 times more likely to die
before their first birthdays than are non-indigenous babies (Aboriginal and
Torres Strait Islander Social Justice Commissioners 1997a: 204).2 Indigenous
babies are twice as likely to have low birth weights as are non-Indigenous
babies (1997a: 208). Indigenous death rates from diabetes are 12 times higher
than comparable death rates among non-Indigenous populations (1997a:
210). Problems of chronic conjunctivitis and blinding trachoma, hookworm
infections, and Hepatitis A are endemic in areas where Aborigines live
(1997a: 21012). Aborigines are 16.5 times more likely to die in police, prison,
or juvenile justice custody (1997a: 1918). They are more likely to suffer from
alcoholism, more likely to smoke, and more likely to die from cervical cancer
(1997a: 21116).
The educational level of most Aborigines lags behind the general populations at every level. In 1996, 15.7 percent of Aborigines left school at 14 or
younger compared to 13.9 percent non-Indigenous and 60.6 percent of
Aborigines left school at age 16 or younger while only 53.5 percent nonIndigenous did (Aboriginal and Torres Strait Islander Social Justice
Commissioner 1997a: 222). A 1996 survey of students attending the University
of South Australia showed that 40 percent of Aborigines do not complete their
degrees compared with 16.7 percent of non-Indigenous students (Bourke,
Burden, and Moore 1996). Indigenous education programs were established
by the Commonwealth in 1969, and since then they have been the responsibility of the Department of Education, Training and Youth Affairs (DETYA)
(and its predecessors). Administration of the main assistance program,
ABSTUDY, is outsourced by DETYA to Centrelink. Aboriginal and Torres
Strait Islander (ATSI) enrolments in higher education were negligible in the
late 1960s but by 1997 had risen to 7,460. Nevertheless, the participation rate
is still less than that for other Australians, and Indigenous students success
and retention rates are about 20 percent lower.
Economic disparities are seen in the annual personal income of persons

72 Samuel L. Myers, Jr.


aged 15 and over, with only 7.1 percent of Aborigines having an income over
$25,000. Almost 23 percent of non-Indigenous have a personal income over
$25,000 (Aboriginal and Torres Strait Islander Social Justice Commissioner
1997a: 224). The Aborigine unemployment rate in 1994, 38 percent, far exceeds
the general Australian unemployment rate of 10.5 percent (Aboriginal and
Torres Strait Islander Social Justice Commissioner 1997a: 225). The inescapable conclusion that the social and economic status of Aborigines and Torres
Strait Islanders languishes behind that of persons in developing countries.
Although they numbered approximately 1.4 million when Europeans
settled in 1788, by 1971 there were only 115,953 persons who identified
themselves as being Aborigines in the Australian Census. As Figure 5.1 shows,
even though the number tripled in the two decades that followed, the Indigenous count remained small.3 With the exception of the Northern Territories,
in no state was the Aborigine population in 1996 larger than 3 percent.4 The
lower social and economic status of Aborigines is not only the result of current
discrimination but is deeply rooted in the dispossession of spiritual and land
rights after the European invasion and the unequal access to resources during
the European occupation. As one elder from the Yarralin people of Northern
Queensland tells the story:
When him got to Darwin . . . Captain Cook come up, see that old fellow sit
down makem spear there, hunting fish. And he dont ask him. Same thing.
Ask him one bit of a story: By Christ, thats good land here. Your
country, its big one? Many people around here?, he said. Big big mob
Aboriginal people. This we country. We never look whitefellow come
through here. Thats first time you coming. We can be ready for you. Got a
big mob spear. We dont want whitefellow. He start to hear that story.
Captain Cook been hear that story. Get ready for this, old fellow. We
might start here. Start to put the bullet in the magazine, start to shooting
people, same like Sydney . . .
Captain Cook, reckoned, I been want to clean that people right up.
Thats good country. I like to put my building there. I like to put my horses
there. I like to put my cattle there . . .
I know Captain Cook been a little bit wrong for these people. This no
more blackfellow country. No more. Belong to me fellow country, he said
. . . Him been bring lotta book from Big England right here now. They got
that book from Captain Cook from England. And thats his law. Book
belong to Captain Cook, they bring it Sydney Harbour. And lotta
government got it in there from Big England.5
The elders story renders a poignant Indigenous interpretation of the theft
of Aboriginal lands and the violence of invasion, which began when
Europeans first settled Australia in the nineteenth century. The conditions
that emanated from this dispossession persisted for generations to come.
Former Commissioner of Aboriginal and Torres Strait Islander Social Justice
Michael Dobson characterized the pre-1967 era this way:

If not reconciliation, then what? 73


Prior to 1967, Aboriginal and Torres Strait Islander peoples lives were
regulated by the laws and policies of the states and territories. To control
Aboriginal people, all states except Tasmania had established bureaucracies headed by Chief Protectors (in Queensland, the Northern
Territory and South Australia), a Commissioner of Native Affairs
(Western Australia) or the executive member of the boards for the
Protection of Aborigines (New South Wales and Victoria). While the
regimes varied from state to state, throughout Australia our lives were
subject to extensive discriminatory control and limitation. For Indigenous
people, life in Australia was akin to life in South Africa under the
apartheid policy.
(Aboriginal and Torres Strait Islander Social Justice
Commissioner 1997a: 21)
One significant and enduring legacy of an apartheid-type policy in Australia
is persistent racial economic inequality between Indigenous and nonIndigenous people. Indigenous people of Australia are both less likely to be
employed and more likely to be out of the labor force than are non-Indigenous
people. Figures 5.2 and 5.3 show unemployment rates and non-labor force
participation rates of Aborigines vs. non-Aborigines over the age of 14 from
1971 to 1991. Clearly unemployment is higher for Aborigine males and
females than it is for non-Aborigines, as is nonlabor force participation. The
disparity has worsened further, with Indigenous unemployment five to six times
higher in 1991 than it was in 1971. While among males racial unemployment

400,000
352,970
350,000
300,000
265,371
250,000

227,645

200,000
160,915

159,897

1976

1981

150,000
115,953
100,000
50,000
0
1971

1986

1991

1996

Figure 5.1 Aboriginal and Torres Strait Islander population in Australia, 197196.

74 Samuel L. Myers, Jr.

25

Aboriginal Males

20

20

15

15

10

10

0
1971

25

All Males

25

1976

1981

1986

1991

Aboriginal Females

1971

25

20

20

15

15

10

10

1976

1981

1986

1991

All Females

0
1971

1976

1981

1986

1991

1971

1976

1981

1986

1991

Figure 5.2 Percentage of Australians unemployed, aged 15 and over, 197191.

gaps diminished over the years, this is primarily due to the rise in white
joblessness. This reality is seen in Figure 5.4 and has important consequences
for redress of racial inequality. We will argue in subsequent sections that
widening inequality in the face of deteriorating economic fortunes of white
males threatens innovative efforts to achieve racial reconciliation.
The upshot of these measures is that Indigenous Australians lag behind
non-Indigenous Australians. Some commentators have argued that as a result
of targeted anti-poverty programs during the 1980s, the racial gap in incomes
narrowed. The relative position of Indigenous Australians, this reasoning
goes, compares favorably to the relative income position of Indigenous
Americans. This conclusion, reached by two prominent Australian economists
Gregory and Daly (1995) must be tempered by the fact that Indigenous
American data were restricted largely to the Southwestern and Western states
and provided a comparison for a period before the onset of casino gambling
among tribes located in the key Midwestern and Eastern states. Nonetheless,
Figure 5.5, derived from Gregory and Daly (1997), shows substantial income

If not reconciliation, then what? 75

80

Aboriginal Males

60

60

40

40

20

20

0
1971

80

All Males

80

1976

1981

1986

1991

Aboriginal Females

1971

80

60

60

40

40

20

20

1976

1981

1986

1991

All Females

0
1971

1976

1981

1986

1991

1971

1976

1981

1986

1991

Figure 5.3 Percentage of Australians not in the labor force, aged 15 and over,
197191.

inequality between Indigenous and non-Indigenous groups in both Australia


and the USA in 1980 and 1990.
Any apparent improvement in the relative position of Indigenous
Australians the income ratio rose from 0.505 to 0.555 from 1980 to 1990
should be cautiously interpreted. Many Aborigines live in highly urbanized
areas of New South Wales and Queensland, but it is in the rural state of
Northern Territories where Aborigines represent the largest share of the
states population. Little evidence of improvement in that state has been
shown in recent years. Comparing relative incomes in 1991 and 1996, Figure
5.6 shows that Northern Territory Aborigines received only 41 cents for every
dollar that non-Aborigines received. That figure did not change between the
two years.

Racial reconciliation in context


Racial inequality can be understood through a theoretical construct called
white privilege (Myers 1995, 1997a). The dominant Eurocentric view of
racial inequality even the liberal view is what is called a disadvantage
model. That view, particularly prevalent among American and Australian
neoclassical economists (Piore 1968; Viscusi 1986; Hunter and Borland 1997),

76 Samuel L. Myers, Jr.


5.5

5
4.5
4

3.5

3
2.5

2
1971

1976

1981

Males

1986

1991

Females

Figure 5.4 Ratio of Aboriginal to total percentage unemployed, 197191.


0.6

0.583
0.555

0.5

0.505
0.482

0.4
0.3
0.2

1980
1990

0.1
0
USA

AUSTRALIA

Figure 5.5 Indigenous to non-Indigenous income ratios, 1980 and 1990.


Source: Gregory and Daly (1997).

posits that it is the human capital deficiencies and educational defects that
underlie the poor market outcomes of blacks and other racial minority group
members. These deficiencies and defects translate into lower earnings, lower
incomes, higher unemployment and generally greater social and economic
inequality (Myers and Sabol 1987; Daly 1992, 1993a, 1993b, 1993c, 1993d,
1994a, 1994b, 1994c; Daly et al. 1993; Altman and Taylor 1994; Australian
Bureau of Statistics 1994; Daly and Hawke 1994; Daly and Lui 1995; Gregory

If not reconciliation, then what? 77


0.45
o.4

0.41

0.41

1991

1996

0.35
0.3
0.25
0.2
0.15
0.1
0.05
0

Figure 5.6 Indigenous to non-Indigenous income ratios, Northern Territory, 1991 and
1996.
Source: Taylor and Roach (1998).

and Daly 1995; Hunter 1996, 1997; Hunter and Taylor 1996; Junankar and Lui
1996; Taylor and Hunter 1996, 1997; Altman and Hunter 1997; Daly and
Smith 1997; Hunter and Borland 1997; Sanders 1997; Sanders and Arthur
1997; Taylor 1997). Racial inequality, in the disadvantage model, seeks the
source of the inequality within the least well-off group.
The white privilege model, in contrast, seeks the source of inequality
within the most well-off group. For there to be an underclass, there must be an
overclass, a small homogeneous elite group of individuals who control
societys economic power. Understanding how the underclass got to be at the
bottom requires understanding how the overclass got to be at the top. The
white privilege model seeks an empowering notion of remedying racial
inequality. It does not seek to make blacks or other racial minority group
members white as the disadvantage model does. Rather, it seeks to
acknowledge and to confront the process by which inequality arose in the first
place. Such acknowledgment of theft, of unfair and discriminatory treatment,
of separation and forceful removal of children, and of the disproportionate
numbers of deaths among those in custody does more than ease the sorrow
and despair of those at the bottom (Council for Aboriginal Reconciliation
1994e; Commonwealth of Australia 1997). It squarely places the burden on
the shoulders of those at the top, whose positions arose out of ill-earned
advantage (Council for Aboriginal Reconciliation 1994a; Hunter 1997).
Research on US racial inequality clearly demonstrates that the overclass
has maintained its superiority in the marketplace, not because of the disadvantage of those at the bottom, but because those at the top consistently
exhibit discriminatory behaviors. These behaviors adversely affect people who

78 Samuel L. Myers, Jr.


are not like them generally, but provide advantages to people who are like
them specifically (Myers and Darity 1998).
Being white holds a peculiar advantage in the USA. Once one embraces the
American ideal of freedom and equality, then it does not matter much whether
ones ancestors came from Ireland, Germany, France, Syria, or Northern
India. What matters is that one is white. And for those surprised by the
mention of India, be assured that, until recently, East Asian Indians along
with Northern Africans and peoples of the Middle East were all regarded as
white in America.
One of the first surprises to an American researcher is the fact that the
Australian Census form does not contain a check box for white. Throughout
the twentieth century, Australians have diligently counted their members and,
almost as an oversight, recorded in recent years those who identified
themselves as Aboriginal or Torres Strait Islanders (Australian Bureau of
Statistics, 1994). But no box exists for white.
There is a box for ethnicity, which can range from Afghan to Zulu, but no
box for white. And when white Australians are asked what is their race, many
take great offense. They will insist that they are Celtic or Welsh or Irish or
perhaps Mongol or Flemish or even a bit of Moor. But the word white appears
not to be within their lexicon, that is, unless they are what we call in America
WASPS or White Anglo-Saxon Protestants. For Australians, those are
Anglican Englishmen. But, still, Australians do not have a box for white.
The reason for the surprise is that if no white race exists in Australia either
because the Census says so or because the masses say so then how can there
be white privilege? White privilege is understood by authors such as
University of Florida sociologist and race relations expert Joe Feagin (see
Feagin and Sikes 1994; Feagin and Vera 1995; Feagin, Vera, and Imani 1996;
Feagin 1998; St Jean and Feagin 1998; Feagin and Feagin 1999) to be the
power and the economic influence that permits the European settlers to claim
such legal myths as Terra Nullius6 or to create fictional chiefs or kings. It
permits settlers to sign treaties with the chiefs or kings whereby a dark-skinned
people gives up its rights (Council for Aboriginal Reconciliation 1994g),
honored traditions and way of life (Council for Aboriginal Reconciliation
1994h) for a few blankets and trinkets.
These may seem like tiny quibbles with the Australian Bureau of Statistics
over failure to include a designation called white. But it can be a more
fundamental reflection of the Australian refusal to acknowledge whiteness
and therefore white privilege, which helps to explain the difficulty Parliament
now faces in dealing with Wik (High Court decision defining native title
rights).7 If there is no white race, there can be no white privilege. How
conveniently Australians have submerged the central theoretical premise for
redressing racial inequality!
The journey toward understanding racial reconciliation as a remedy to
racial inequality begins by acknowledging that racial inequality is rooted in
white privilege. It is in part because white privilege persists in America that

If not reconciliation, then what? 79


efforts to eliminate racial economic inequality have failed in the past. Past
policies were based on the disadvantage model. They sought to reduce
deficiencies of blacks and other minorities without addressing racism and
white privilege.8
Some Americans have embraced racial reconciliation. This was evident in
President Clintons call for racial reconciliation in the USA at a time when
affirmative action and race-based initiatives for redressing past wrongs against
African Americans and other racial minority group members were and
continue to be under attack. Racial reconciliation in the USA should be
understood as a public policy response to the apparent failure of alternative
means of remedying racial and ethnic economic inequality.
The attack upon affirmative action comes in three parts. The first is related
to the belief that affirmative action is no longer needed because the problem
we were attempting to remedy racial discrimination and the lingering
vestiges of government-sanctioned slavery and segregation is no longer is a
significant problem (Aboriginal and Torres Strait Islander Social Justice
Commissioner 1997b). Yes, much racial inequality remains, according to this
view, but that inequality is not the result of on-going racism or racial
discrimination. Instead, it is rooted in defects within racial minority
communities themselves (Aboriginal and Torres Strait Islander Social Justice
Commissioner 1997a; Commonwealth of Australia 1997; Chapter 3 in
Aboriginal and Torres Strait Islander Social Justice Commissioner 1997a).
Either these defects are manifestations of such prior policies as affirmative
action or welfare that have unintentionally led to a perverse form of
dependency upon the government or these defects are genetic, environmental,
or even the lingering legacy of prior periods of social deprivation.9 Only the
last of these effects can justly be remedied by government action and racebased initiatives do not assure a remedy.
The second part of the attack presumes that even if discrimination lingers
from the past and even if racism or racial discrimination continues, affirmative
action does not solve the underlying problem. While efforts to promote racial
minority group representation among students in major colleges and
universities may be well-meaning, they do not assure graduation of minority
group members from those institutions. Special funding for scholarships,
summer programs and admissions of African Americans, American Indians,
Alaskan natives and Hawaiian natives, Latinos, and often Asian Pacific
Islanders may be justified by their continued under-representation in many
parts of academia. It is more difficult to justify based on effectiveness in
increasing their representation. Critics of affirmative action even those who
admit something needs to be remedied point repeatedly to the dismal failure
of prior affirmative action efforts to remedy racial inequality.10
The third argument against race-based initiatives to remedy racial and
ethnic economic inequality is that these initiatives are unfair. The view is that
in a constitutional democracy, where the majority rules, any effort that
consciously benefits a minority group based solely on their race at the

80 Samuel L. Myers, Jr.


expense of the majority is suspect. The legal and constitutional logic of this
reasoning comes from post-Civil War Constitutional amendments prohibiting
states from passing laws that would disenfranchise newly freed slaves. The
language of the equal protection clause in the Fourteenth Amendment to the
US Constitution does not speak specifically to the preferred status of one race
over another. Within the historical context of the times, however, it was
understood that laws could not be passed that harmed former slaves, while
leaving whites unharmed.11
This three-pronged attack on affirmative action and the dismantlement of
the civil rights apparatus of the 1960s represents an ideological mind set that
can be seen either as a negative resurgence of racism or what I call elsewhere
new racism or a positive manifestation of a new quest for remedying
racism (Myers 1997a). The negative perspective has preoccupied most of my
writing over the past several years, and I am often accused of unfairly labeling
as new racists honest intellectuals who believe they are merely searching for
another way. My visit to Australia has given me the freedom and the
intellectual distance to see the alternative, more positive, interpretation of
these movements in American society.
The positive force accompanying the unfortunate ugliness of the retrenchment efforts away from affirmative action and race-based remedies to racial
inequality is compelling policy makers to confront a need to acknowledge the
deeply rooted pain and hurt associated with prior racism and to reconcile
(Commonwealth of Australia 1997). Racial reconciliation in the USA can be
seen as a positive response to the dismantling of an alternative and now largely
unacceptable form of remedying racial economic inequality. Seen from the
perspective of Australians who are struggling with their Aboriginal reconciliation efforts,12 from the perspective of the Maori who through the Waitangi
Treaty13 efforts have nearly completed their reconciliation efforts and through
the lenses of the South African Truth and Reconciliation efforts,14 one can
only applaud the initiatives of the Clinton administration to seek healing.
Whether such healing is feasible and represents a viable alternative to other
remedies to racial and ethnic economic inequality is still unknown in the
subsequent administration. Nevertheless, examining the inner workings of the
racial reconciliation process and exploring what makes it a possible alternative
remedy in the post-Civil Rights era is worthwhile.15

Australian academics views on reconciliation


One advantage of economics and empirically oriented policy analysis is that
the tools of the science permit a quantitative perspective on what can be
misleading if presented only in an anecdotal way. A dedicated faculty member
can teach a lecture with 100 students and have 99 of them say theyve been
challenged and have learned a lot. But that one student who writes on the
evaluation form that the teacher is incompetent and the worst he has ever had
causes the teacher not to be able to sleep for a week. Similarly, after personally

If not reconciliation, then what? 81


interviewing dozens of Australian intellectuals and academics about reconciliation, the views and perceptions that resonate months later are the
outrageous views that ultimately influence and obtain the greatest media
attention. Pessimism about the prospects of achieving true reconciliation in
Australia and of being able to translate these efforts into successful racial
reconciliation in America must be replaced by cautious optimism because of
research findings such as those described below. Respondents on the margins
really do not account for the true views and underlying feelings of the majority.
Almost four dozen faculty and staff completed a survey instrument distributed at talks at Australian universities. The sample was almost evenly divided
between those who indicated that they were Aboriginal or Torres Strait
Islanders and those who were not. The survey followed seminars where the
author discussed the problem of racial inequality in the USA and the
retrenchment efforts away from affirmative action. Most seminar participants
were members of the faculty of Aboriginal Studies or research units associated
with Aboriginal affairs. At one location, faculty members were part of a
universitywide diversity initiative.
The survey had seven questions. The first question asked whether acknowledgment of prior wrongs was a necessary condition for reconciliation. Almost
everyone agreed that it was. Of the 45 responses, 43 indicated that acknowledgment was extremely important. One said it was somewhat important.
One said it was not important at all. Overall, 95.6 percent (43 out of 45) felt
that acknowledgment was extremely important (see Figure 5.7).
A second question asked whether an official apology was required for
reconciliation. A few felt less strongly about this. Four said it was somewhat
important, while two said it was not important at all. Overall, 86.7 percent
(39 out of 45) felt that an official apology was extremely important (see
Figure 5.8).
45
40
35

Number oof
respondents

30
25
20
15
10
5
0

Extremely
important

Somewhat
important

Not important
at all

Figure 5.7 Is acknowledgment of prior wrongs a necessary condition for reconciliation?

82 Samuel L. Myers, Jr.


45
40
35
30
25
20
15
10
5
0

Extremely
important

Somewhat
important

Not important
at all

Figure 5.8 Is an official apology required for reconciliation?

The third question threw the researcher off balance. When asked whether
compensation for prior wrongs was required for reconciliation, 57.8 percent
(26 out of 45) said that compensation was extremely important, 31.1 percent
(14 out of 45) said it was somewhat important, 4.4 percent (2 out of 45) said
it was not very important, 4.4 percent (2 out of 45) said it was not important
at all and another 2 percent (1 out of 45) did not respond (see Figure 5.9). The
responses were examined by the racial breakdown of the sample. This was
revealing because many white respondents refused to be pigeon-holed into a
white classification. Some whites contested the very idea of being called
45
40
35
30
25

Extremely important
Somewhat important

20

Not very important


Not important at all

15

No response

10
5
0

Figure 5.9 Is compensation for prior wrongs required for reconciliation?

If not reconciliation, then what? 83


white, even though they admitted on the questionnaire that they were not
Aboriginal, Torres Strait Islander, Asian, South Pacific Islander, nor other.
Both respondents who claimed compensation was not important at all
were white. They also wrote in the margins that not only was compensation not
very important, it was dangerous and undesirable. In conversations with one
prominent Australian economist who shares this view, the author learned that
much white opposition to compensation for prior wrongs stems from a belief
that it would set an undesirable precedent. This view holds that other
deserving groups in society might make similar claims for compensation.
Women, British children brought to Australia during World War II, Chinese
laborers and any number of other claimants could clog the legal system with
compensation demands. The argument against compensation makes this
point and also occasionally makes the point that the wrongs did not occur as an
act of war, so they do not fall under the commonly accepted international
standards for redressing wrongs against subjects who have been harmed by
state actions (Commonwealth of Australia 1997; also see n. 1).
Leaving aside for a moment whether stealing Aboriginal children, raping
their daughters, taking their lands and culture do, in fact, represent acts of
war, one is struck by the vehemence of arguments against compensation.
Economists, in particular, seemed far less interested in the remaining and
largely economic questions dealing with determination of the size and distribution of the compensation and instead seemed to dwell on why compensation
itself was undesirable. This is somewhat odd, given an economists training in
calculations and debate, even if one disagrees with the underlying issue being
debated. Economists ought to be able to talk seriously about who should
receive how much compensation and how it should be distributed and
financed, even if they are opposed to compensation on philosophical or
political terms. Conversations never evolved to the interesting economic
discussions because of the vehemence of opposition by a few to the very notion
of compensation. This vehement opposition to compensation enthraled the
author and the few hostile comments opposing compensation on the questionnaire enraged him. As a result, he was temporarily misled into believing that
whites opposed compensation, while Indigenous people favored it.
So the hypothesis that responses of the whites in the sample were different
from responses of the Aborigines was tested. Much to his surprise he found
sufficient variation in the responses, even among the Aborigines, to create a
sizeable dispersion of results, making the conclusion that whites and nonwhites differed untenable. The same percentage of whites felt that compensation was very important as did Aborigines and Torres Strait Islanders.
Although there were more Indigenous than white respondents who felt that
compensation was somewhat important and more white respondents than
Indigenous who felt that compensation was unimportant, the numbers
were small. The result is that we cannot reject the hypothesis that whites
and Indigenous peoples views are about the same: that compensation is
extremely or somewhat important.

84 Samuel L. Myers, Jr.


There are some substantial qualitative reasons why Indigenous Australians
ranked compensation as somewhat important as opposed to extremely
important. Many Indigenous respondents explained that it was nearly
impossible to compensate for the pain and suffering and the loss of an identity.
White respondents often focused on the administrative complexity of
measuring compensation as a reason for being less enthusiastic about it.
Still, it is important to realize that even an academic researcher can be
misled into believing that whites and Aborigines are in basic disagreement
over the entire spectrum of the distribution. This is not accurate. A safe
majority of whites and nonwhites largely share the view that compensation is
desirable and extremely important. This is good and optimistic news.
Racial reconciliation rests on three prongs. One is acknowledgment of prior
wrongs. Another is an official apology for those wrongs. A third is compensation for the wrongs. Much work remains within the economics community to
address some of the technical aspects of the compensation question: How
much? For how long? In what form of payment? To whom? These technical
questions can be addressed while the politicians and journalists inflame us
over the first two questions. Perhaps more careful thought to the technical
questions would help extinguish the flames from a vocal minority and permit
the majority to accept compensation as both necessary and desirable.
Government authorization of $63 million dollars in 1997 to provide
psychological counseling and to assist in locating lost relatives is not compensation for prior wrongs. It may help repair some of the damage associated with
those wrongs, but it does not apparently go directly to the victims. Market
economists would argue it would be better to give the money directly to the
victims who may well choose to spend the money on psychological counseling or, perhaps, locating relatives. The current scheme appears to benefit only
the libraries, archives, location services, and psychological counselors not
the victims. It would be extremely surprising if real economic benefits trickle
down to the stolen generation from this expenditure of funds. If anything, it
creates a new industry that paradoxically may thrive on maintaining the
pathology from the stolen children process and continued dependency of
Aborigines on the goodwill of a government that refuses to apologize
(Commonwealth of Australia 1997).
If there is anything that can be concluded from the survey and from
observations of Australians recent responses to the Wik, to the Stolen
Children report (Commonwealth of Australia 1997), to the funding for the
Aboriginal and Torres Strait Islanders Commission (ATSIC)(1997), and to
the difficulties in proceeding with the Aboriginal Reconciliation initiative,16 it
is that opponents are few but vocal. The opposition is baiting the Australian
majority and the majority is confused, because it does not see itself as
privileged. Without a theory of white privilege, the majority cannot easily
reject the flaw in the logic of the opponents. They remain silent and appear to
agree with the opponents, when in fact they do not.

If not reconciliation, then what? 85

Transplanting racial reconciliation to America


Will it be possible to adapt this Australian model of racial reconciliation to
heal the wounds of racism in the USA?
The racial reconciliation efforts of the Clinton administration in the USA
have not been embraced by the Bush administration and follow several years
of uncertainty and ambiguity within the Democratic leadership on the
direction of national policies on race. During his administration President
Clinton ordered each cabinet department to prepare a report on what worked
and what did not work in implementing affirmative action plans. This followed
a speech in which Clinton intoned: Mend it, dont end it. The Mend it, dont
end it policy statement was akin to his policy on gays in the military: Dont
ask, dont tell. Its centrist tone was intended to convey to gays and their
supporters that strict enforcement of archaic and punitive sanctions against
homosexual acts within the armed forces would not be used to discriminate
against people with different sexual preferences. Simultaneously it was to
convey to the Religious Right that they need not fear sending their sons into
long periods of separation from their families.17
Similarly, the Mend it, dont end it policy was designed to convey to
African Americans and affirmative action supporters that good programs
would not be eliminated, while still signaling to the general population that the
problem of putatively unfair quotas and practices discriminatory to whites
would be fixed. Just as the Dont ask, dont tell policy ran into constitutional
difficulties, in an administrative twist, the Mend it, dont end it reports never
got produced or were never publicly released for general distribution. It is
almost as if the policy analysts in the various government bureaus, who were
instructed to determine which affirmative action programs were working and
which ones were not, mistakenly thought their instructions were: Dont ask,
dont tell!
The US racial reconciliation process under Clinton was a top-down
initiative the Presidents initiative. After announcing he would create the
initiative, the President failed to convene the groups for months. The group
was a carefully picked mix of respectable whites, blacks, Asians, and Latinos.
No American Indians or Alaskan or Hawaiian natives were to be found on the
seven-member commission. Once the group convened, it was unable to
articulate its agenda and until recently little visible output has emerged.
One of the main fault lines of the US racial reconciliation process was the
persistent opposition from the Republican leadership to the Commissions
composition. According to news reports, when outgoing Republican House
Speaker Newt Gingrich was contacted about membership of the group, which
ultimately included a prominent Republican (former Mississippi Governor
William Winter), Gingrichs office never responded. Gingrich and other
leaders on the right, however, argued publicly that the Presidents Race
Reconciliation Council was too one-sided and that the hearings held around
the country were themselves a mockery of the reconciliation process because

86 Samuel L. Myers, Jr.


they failed to include diverse perspectives about the race problem in
America.18
What is also intriguing about the race reconciliation dilemma in America is
that the call for racial healing did not originally come from the left or center. It
came, amazingly, from the right. As proof that they are not racists even
though they are opposed to affirmative action, to welfare, to minority
scholarships and the like the new right has called for acknowledgment and
apology for slavery and the wrongs against blacks. Some even recommend
compensation. Then, in this view, we will forever put the claims of blacks
behind us.
The American context is one where racial reconciliation is seen as a means
toward ending black claims to special treatment. Cloaked in religious terms,
racial healing and reconciliation serves a useful purpose in undermining
demands for whites to share their privilege. In the starkest economic terms,
paradoxically, the reconciliation if accompanied by compensation actually
may assist black communities in becoming less dependent on white America
and more self-reliant.
That white America might just be willing to embrace this concession is due,
in part, to the reality that blacks in America are so visible. It is impossible to be
black in America and not be seen, heard, or felt. Although I am deaf, I can feel
the change in the tone and conversation when I walk into a room full of whites.
This presence of blackness in American society makes for a compeling argument when one challenges the notion that white privilege exists. Whites can be
reminded, whether they like it or not, of the harsh impacts of the segregation,
discrimination, slavery, and disenfranchisement of blacks for centuries.
In Australia, particularly in urban areas and in places like Adelaide, whites
seem not to even see blackness. Whether blackness is that of Indigenous
people who are the original land owners or of foreigners or visitors like me, it
appears to be invisible. A black American male can feel invisible in white
Australia, although he is constantly reminded of his blackness in America.
Security guards follow him closely when he enters a department store. He
receives greater scrutiny than the white person in front of him when he writes a
check or uses his credit card. In America, he feels his blackness.
The researcher closely watched whites treatment of Aboriginal people in
Australia and came to believe that Aborigines were invisible in the eyes of
whites. In Darwin, for example, black people were very obviously on the fringe
of the local marketplace and many, many Aborigine people were sleeping in
the parks, sitting on benches, and generally roaming about. Life went on
almost as if they did not exist. No Aborigines worked as clerks, secretaries or in
the service positions in the many shops, restaurants, hotels, or art galleries.
Their invisibility underscored both why they were not employed and
illustrated how no one seemed to be upset about it (Council for Aboriginal
Reconciliation 1994g; Daly, 1992).
This invisibility works in concert with the problem of white privilege in
Australia. Until whites begin to see Aborigines, to feel their pain, and to

If not reconciliation, then what? 87


realize the harm they have created, no prospect for reconciliation exists. The
first steps towards reconciliation are acknowledgment and apology, so there is
hope that through education and self-awareness whites in Australia also will
realize their privilege and in so doing will appreciate a form of seeing that will
make reconciliation meaningful and long-lasting.
It is not clear that this can happen in the USA. The visibility of blacks has led
whites to reject the very basis for reconciliation: acknowledging that they have
done something wrong. Slavery was a long time ago, whites say, Tell me
what did I do wrong yesterday that caused you black people to be so poor, so
criminal, so backward?
But in Australia, children were stolen yesterday, or at least within recent
memory. In Australia, native title to land rights claims (Aboriginal and Torres
Strait Islander Social Justice Commissioner 1997b) are not remote and farfetched. In Australia, whites who visit the moving exhibits at the museums or
who read the report Bringing Them Home (Commonwealth of Australia 1997)
will, like the researcher, shed tears and be haunted by nightmares. They will
ask, How could this happen in a civilized nation? They will be remorseful,
and they will recognize that the plight of Australian blacks is due not to the
disadvantage that backward peoples share, but to the privilege that whites
inherit. Because Aborigines are now largely invisible, the eye-openers of
educational and informative efforts that play a part in the reconciliation
process promise to reconfigure relationships between whites and Aborigines
and to legitimize whatever compensation eventually emerges (Daly 1992;
Council for Aboriginal Reconciliation 1994b, 1994c; Daly and Lui 1995;
Junankar and Lui 1996; Taylor 1997).

Conclusion
Prospects of successful reconciliation between Aboriginal people and white
Australians are good. The process in place will force Australia to understand
its whiteness. In so doing, there is hope for also addressing the problems of
anti-immigrant and anti-Asian sentiments that abound. There is also hope for
a more engaged and enlightened foreign policy role in the region. Australia
will become whole, it will become united, and it will be healed.

Notes
1 For an overview of the Australian reconciliation process visit the Australian
Reconciliation Convention website, http://www.austlii.edu.au/au/special/
rsjproject/rsjlibrary/car/arc/oview.htm; the Convention, The Path to Reconciliation: Renewal of the Nation, was held on May 268, 1997.
2 These figures are based on statistics from Western Australia, South Australia and
the Northern Territory, the only states that were deemed by the Australian
Bureau of Statistics to have death records of the quality needed for comparisons.
3 Much dispute about the causes of the dramatic increase in the counts exists (see
Gray 1997). The most obvious explanation is the under-counting of Aborigines in
earlier years of the census. The 33 percent increase in Indigenous population

88 Samuel L. Myers, Jr.

5
6

9
10

11
12
13
14
15

16

between 1991 and 1996, however, is related to what Gray calls unexplained population growth. One component of this unexplained growth is self-identification.
Another component consists of births through intermarriage.
See Aboriginal and Torres Strait Islander Social Justice Commissioner (1997:
188). In the Northern Territories, Aborigines account for 26.44 percent of the
total population. Aborigines in the Northern Territories also account for 13.13
percent of the Australian population. The majority of Aborigines, however, live in
the states of New South Wales and Queensland, representing 55.8 percent of all
Indigenous Australians.
Reproduced in Aboriginal and Torres Strait Islander Social Justice Commissioner (1997a: 1), citing Rose (1984).
Australian doctrine, Terra Nullius (Latin) meaning a land belonging to no one, a
land whose Indigenous people were taken to be so primitive in their social
organization that it was, socially speaking, unoccupied (see Sharp 1996 and n.1 for
more information).
The High Court decisions, Wik Peoples v. State of Queensland and Others;
Thayorre People v. State of Queensland and Others 1996 find that pastoral leases do
not give exclusive possession to pastoralists and that native title rights are not
necessarily extinguished by the grant of a pastoral lease. Native title rights can
therefore continue at the same time that land is subject to a pastoral lease. But
where there is a conflict between the exercise of rights granted under a pastoral
lease and the exercise of native title rights, the rights of the pastoralist will prevail
Michael Dodson, as quoted in Aboriginal and Torres Strait Islander Social Justice
Commissioner (1997a: 73).
See Joe Feagin in his essay in Myers (1997b). These opinions change when the
option to exclude strict quotas is not offered. The reason political leaders were
so reluctant to embrace affirmative action in the 1990s was that these dominant
opinions of opposition to affirmative action overwhelmed the landscape.
For government dependency views see Commonwealth of Australia (1997).
Pollster Louis Harris points out that although support for affirmative action has
declined and political leaders are vocally opposed to it, there still is at least at the
time of his article a slight majority that favors affirmative action (Harris 1996:
4952). The wording of the question, however, is favor or oppose affirmative
action without strict quotas. As Joe Feagin details in his essay in Myers
(1997b), these opinions change when the option to exclude strict quotas is not
offered. The reason political leaders are so reluctant to embrace affirmative
action in the 1990s is that these dominant opinions of opposition to affirmative
action overwhelm the landscape. Council for Aboriginal Reconciliation (1994d).
City of Richmond v. J. A. Croson Co., 488 US 469 (1989). Podberesky v. Kirwan 38
F. 3d 147 (4th Cir. 1994). For more details see Boston (1993) and Rice (1991).
In 1991, the Australian Parliament established the Council for Aboriginal Reconciliation, which was responsible for steering and promoting the achievement of
racial reconciliation by the year 2001.
The Sealord purchase in the Treaty of Waitangi (Fisheries Claims) Settlement
Act 1992 provided allocation procedures for Maori fisheries assets.
The Truth and Reconciliation Commission (TRC) was established after South
Africas transition to a nonracial democracy. Its primary purpose is to investigate
acts of violence and discrimination committed during apartheid.
For the Post-Civil Rights era see Joe Feagin in Myers (1997b). These opinions
change when the option to exclude strict quotas is not offered. The reason
political leaders are so reluctant to embrace affirmative action in the 1990s is that
these dominant opinions of opposition to affirmative action overwhelm the
landscape.
See n. 1.

If not reconciliation, then what? 89


17 White House Office of Communication, ClintonGore Administration: A Record
of Progress for Gay and Lesbian Americans (October 1998) White House, Office
of Press Secretary, Remarks by the President at National Defense University (July
19, 1993).
18 Gingrich and Connerly (1997). Newt Gingrich was speaker of the US House of
Representatives. Ward Connerly chaired the American Civil Rights Institute and
is a University of California regent, a member of the governing body of the
University of California system.

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Feagin, J. R. (1998) The New Urban Paradigm, Rowman and Littlefield, Washington,
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Feagin, J. R. and M. P. Sikes (1994) Living With Racism: The Black Middle Class
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Feagin, J. R. and H. Vera (1995) White Racism: The Basics, Routledge, New York.
Feagin, J. R., H. Vera and N. Imani (1996) The Agony of Education: Black Students in
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Gingrich, N. and W. Connerly (1997) Face the Failure of Racial Preferences, New
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Gray, A. (1997) The Explosion of Aboriginality: Components of Indigenous
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Gregory, R. G., and A. E. Daly (1995) Change in the Relative Economic Status of
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Hunter, B. and J. Borland (1997) The Interrelationships Between Arrest and
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Hunter, B. and J. Taylor (1996) Indigenous Labour Force Status to the Year 2000:
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Junankar, P. N. and J. Lui (1996) Estimating the Social Rate of Return to Education
for Indigenous Australians, CAEPR Discussion Paper, No. 123, Centre for
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Myers, S. L., Jr (1995) Equity, Fairness, and Race Relations, Emerge 6: 9, 4852.

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Myers, S. L., Jr (1997a) Why Diversity is a Smoke Screen for Affirmative Action,
Change 29: 4, 2432.
Myers, S. L., Jr (1997b) Civil Rights and Race Relations in the Post ReaganBush Era,
Praeger, Westport, CT.
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Inequality in the United States Since 1945, Edward Elgar, Northampton, MA.
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Multiracialism and meritocracy


Singapores approach to race and
inequality
R. Quinn Moore

Introduction
Throughout much of the world, there has been a strong ideological attachment to the desirability of procedural equality. The logic runs that if the rules
are not the same for everyone, the system is simply not fair. However in
multiracial, multi-ethnic, or otherwise diverse societies, procedural equality
often has come under fire when it has not yielded equality of results. Fair
meritocracy is an ideological attempt to reconcile these two notions of
equality. Proponents of fair meritocracy argue that unjust inequality is
endemic to strict procedural equality, given the inherited advantages of
privileged groups. Inherited wealth, educational advantages, nepotism, and
benefits from discrimination against other groups create a cruel meritocracy
that does not truly reflect the talent and hard work of all individuals.
To counter this meritocratic distortion, fair meritocracy dictates that
societies should strive for fair equal opportunity in which inherited
advantages or disadvantages are compensated for. In other words, efforts
should be made to level the playing field for all individuals before competition
begins. The resulting meritocracy should yield what is deemed a justly
stratified society, and simultaneously reflect both equality of results and
procedural equality. Although this approach is ideologically appealing, there
are significant obstacles to its practical application, namely the difficulty of
removing the socially entrenched advantages of the privileged and the
difficulty in assessing when stratification is truly merit-based, given that any
privileged group is likely to claim that the wealth distribution is fair.
Singapore represents a practical, if imperfect, attempt at applying fair
meritocracy to a multiracial society. Throughout its independence and
dramatic economic growth, Singapore has maintained a strict adherence to
the ideal of a procedurally equal meritocracy, while simultaneously promoting
multiracialism as a fundamental national ideal. The struggle to maintain these
occasionally conflicting ideals has yielded an interesting mix of policies that
seeks to sort individuals objectively while allowing racial groups to compensate for their perceived social and economic disadvantages. Singapore is
somewhat unique in actively seeking to achieve a fair meritocracy. However,

94 R. Quinn Moore
this system is hampered by the seemingly universal problem of ethnic
favoritism and entrenched social advantage. While it would be difficult to
claim that Singapore has achieved fair multiracial meritocracy, their efforts
provide a valuable example.

The characteristics of Singapores racial groups


Before discussing the specifics of Singapores racial policy, it is useful to outline the economic and social characteristics of each racial group and to discuss
the ideological roots of Singapores philosophy toward race and meritocracy.
Singapore was originally inhabited by a small group of Malays engaged in
agricultural pursuits. The early nineteenth century decision by the British to
convert Singapore into a port to rival Jakarta initiated a huge influx of workers
from throughout the region and around the globe. This migration has yielded
a diverse society, which has had a stable mix of 75 percent Chinese, 15 percent
Malay, 7 percent Indian and a small population of other groups commonly
referred to as Eurasians.1 This Other category is relatively small and has
undergone dramatic shifts in make up due to in and out migration, so this
discussion will focus on the Chinese, Malay, and Indian groups.
The economic hierarchy in Singapore can be characterized in terms of race,
with the Chinese on the top, the Malays on the bottom and the Indians
straddling the middle. This hierarchy is reflected in income, education,
housing and virtually every other social and economic category.2
Since attaining self-government in 1959, Singapores stated development
philosophy has posited that economic growth would produce improvement for
all segments of the population, and with such improvement, inter-racial
disparity would eventually dissipate. However, the 1980 Census showed that
the dramatic economic boom of the 1970s had not affected all racial groups
equally. Malays were severely under-represented in both the upper levels of
the educational system and in the high-prestige, economically dynamic
occupations (see p. 101). As a result, Malay household income was only 74
percent of Chinese income (Table 6.1).
Despite efforts to ameliorate inter-racial disparity, the household income
gap between Malays and the Chinese actually worsened to 70 percent of
Chinese income during the 1980s.3 However, it is perhaps encouraging that
Malays were not excluded entirely from the 1980s growth as Malay income
increased by 150 percent. In addition, Malays no longer dominate the lowestincome categories according to the 1990 Census, which shows that Malays
actually have the lowest percentage of workers earning less than S$500 per
month.4 Moreover, the Gini coefficient for Malay household income
decreased fairly significantly from 0.399 in 1980 to 0.347 in 1990, which
suggests that Malay economic development is spread across Malays as a group
rather than within a Malay elite.5
The 1980s also saw a more significant gap develop between the Chinese and

Singapores approach to race and inequality 95


Table 6.1 Household monthly income in Singapore dollars and ratio to Chinese monthly
income by race, 1980 and 1990
Household
monthly income

Total
Below 1,000
1,0001,999
2,0002,999
3,0003,999
4,0004,999
Above 5,000

Total

Chinese

Malay

Indian

Other

1980 1990

1980 1990

1980 1990

1980 1990

1980 1990

100.0 100.0 100.0 100.0


57.6 15.9 56.9 15.6
26.3 27.0 27.0 25.4
8.6 20.1
9.1 19.6
3.5 13.0
3.6 13.2
1.7
8.2
1.6
8.6
2.3 15.6
1.8 17.3

100.0 100.0
67.7 17.0
26.0 37.0
4.8 23.4
0.9 11.6
0.3
5.6
0.3
5.4

100.0 100.0
61.6 16.5
24.1 28.4
8.1 21.6
3.0 13.0
1.3
7.4
1.9 12.7

100.0 100.0
23.2 16.6
15.0 20.1
14.6 16.4
13.1 11.8
10.6
8.9
23.5 26.2

Average
1,228 3,076 1,213 3,213 896 2,246 1,133 2,859 3,225 3,885
Ratio to Chinese 1.01 0.96 1.00 1.00
0.74 0.70
0.93 0.89
2.66 1.26
Source: Department of Statistics (1992: 69).

Indian household income, as the Indian:Chinese ratio fell from 93 percent of


Chinese to 89 percent (Table 6.1). This is even more disturbing since the
Indian labor force participation rate, and hence the workers per household,
was already the highest among all ethnic groups in 1980 and increased more
than any other group during the intercensal period.6 This suggests that the
actual gap between wages earned by Indian and Chinese workers is even
greater than the household income data suggest.7 Thus, in a society that places
great value on the cultivation of the elite, the Chinese are strengthening their
position at the top of the social hierarchy and becoming increasingly dominant
in the upper echelons of the economy.8
The persistence of this economic hierarchy has led to strong social stigmas
and stereotypes associated with race. There is a pervasive belief that the
Chinese are more intelligent, hardworking, and economically astute than
other racial groups. Former Prime Minister Lee Kuan Yew, the indisputable
Singaporean leader from independence until 1990 whose opinion still
commands considerable respect, claimed that the Chinese are a race [with
an] intense and exacting civic culture . . . [which] is conducive to economic
development and commercial ability (Lee as quoted in Tamney 1996: 102).9
In contrast, Malays are considered to be generally lazy, unintelligent, and
unambitious. One cabinet member explained that poor Malay economic
performance was the result of a feudalistic consciousness and from not
having the spirit of hard work (Tamney 1996: 98).10 Similarly, Lee explained
that Hindus are the victims of a relaxed culture that is incongruent with the
values that make economic development possible (Lee as quoted in Tamney
1996: 102). South Asians in general are considered to be overly individualistic
and untrustworthy when compared with the Chinese.11

96 R. Quinn Moore

Ideological basis for Singapores multiracial meritocracy


Because Singapore was originally made up of immigrants from diverse origins,
the inhabitants had no conception of a Singaporean nation. Thus the
government felt that its constituents would have no loyalty to a Singaporean
state because [there is no] deep connection with the territory or [among
population groups] through a common, primordial ancestry, [or] pre-colonial
past (Ang and Stratton 1995: 74). When this lack of national identity was
viewed in the context of differing economic and social statuses of racial and
ethnic groups, rivalry among them, regional ethnic tension, and past incidents
of communal violence, doubt among early leaders about Singapores viability
as an independent political state was considerable. 12
The key to defusing Singapores ethnic tension was an emphasis on
multiracialism and meritocracy. Each racial group was cast as an equally
important, distinct part of a nation that would strive to ensure that success
came on the basis of merit, rather than racial, ethnic, religious, or cultural
favoritism. Emphasizing that groups should maintain their distinctiveness was
crucial to the success of Singapores multiracial nationalism, particularly since
there was no basis for claiming any intrinsic unity in the Singaporean population. The government decided that rather than seeking harmony through
the abolition of ethnicity . . . it [would] set about not only enhancing ethnicity
as a primary social identification, but extend this principle to making ethnicity
the main form of sociocultural classification (Clammer 1985: 142). In short,
Singapore would become a multiracial society with the intention of preventing
racial discord. This multiracialism would then become the ideal around which
a sense of nationhood could be cultivated.
However, Singapores devotion to meritocracy as a path to economic
development dictated that multiracialism would not include any affirmative
action or compensatory discrimination measures, despite that fact that at the
time of independence the Other/Eurasian category (then primarily British)
was vastly wealthier than either the Chinese or Indians and the Malays were
much poorer than all the groups. The ideal that each culture was an equally
important part of the nation and that each individual would be rewarded solely
on the basis of merit was presumably enough to unite Singapores disparate
groups.
Given inter-racial disparity, maintaining the balance between multiracial
harmony and meritocracy has required some degree of compromise. In broad
terms, this compromise can be characterized using the framework of fair
equal opportunity. The government has recognized that difference in initial
or inherited conditions may prevent certain worthy individuals from rising
through a meritocracy established by the educational system and the labor
market. In response, a set of policies has been instituted to mitigate disadvantages before entering the procedurally equal playing field of meritocratic
equal opportunity.
Singapores fair equal opportunity is manifested in three ways. First, the
government allows each racial group to create a community-based self-help

Singapores approach to race and inequality 97


group to address its cultural, educational, and social deficiencies. Second,
massive government-subsidized housing projects provide people of all income
levels with relatively similar living conditions to ensure that the rich do not
have large environmental advantages over the poor. Finally, after entry into
the playing field has been equalized by self-help and housing policy, the
procedural equality of the meritocracy is supposed to be guaranteed by the
educational system in which success is determined objectively by standardized testing. The hierarchy established by this system is deemed fair as all enter
the social game at similar levels and all determinations of ability are uniform
and, therefore, considered unbiased.

Community-based self-help organizations


Independent Singapores only explicit policy response to racial disparity has
been the establishment of community-based self-help groups for each of the
principal racial groups. These organizations are designed to help members of
a racial group overcome potential social and economic hardships through the
activities of the members of the racial group itself. Self-help groups receive
funding from private donations, automatic payroll deductions, and government matching funds up to a threshold amount. The philosophy behind this
system is that the members of a racial group will best know what problems
their group is facing and how to solve these problems most efficiently. By
decentralizing responsibility for the amelioration of disparity, it is also
expected that the development of dependency tendencies, thought to be
inherent in state-supported welfare systems, will be prevented.13
The formation of Mendaki
After the scope of the inter-racial economic gap had been illustrated by the
1980 Census, the government concluded that policy action was necessary, as
extreme inequality could jeopardize the multiracial harmony so fundamental
to the national ideology. This should not be interpreted as an admission of a
flaw in the economic system, however, since the most widely accepted explanation for this gap is the alleged Malay cultural inferiority discussed above.
Because racial disparity is considered to be the result of cultural deficiencies,
government officials feel no need to make structural or policy adjustments to
alleviate this disparity. Instead efforts have focused on encouraging Malay
leaders to induce fundamental changes in Malay culture.
Pursuant to this approach, the government in 1981 allowed the Malay community to form Mendaki, the first government-sponsored self-help group.14
Although many social problems were to be addressed by this organization, it
was felt that the best way to achieve development was through education and
changing the habits of Malay children. Accordingly, Mendaki focused on
tutorial programs, scholarships, and strengthening the Islamic cultural values
that were considered conducive to promoting hard work and economic success.15

98 R. Quinn Moore
The government provided Mendaki with assistance in several forms. First,
Mendaki was allowed to use the Central Provident Fund (CPF), a governmentsponsored required-savings social security program, to collect S$1 donations
monthly from the paychecks of all Muslims.16 The government then agreed to
match these donations up to a certain threshold. Mendaki also was given
access to government staff, training, and accommodation for its tutorial
programs. Government assistance was structured carefully in an attempt to
avoid the development of welfare-like dependency and to encourage Malays
to help themselves. The amount of assistance and the form that the assistance
took was to be determined entirely by the community itself. Mendaki was
meant to improve Malay education but, more important, it was meant to instill
a sense of self-reliance that would enable Malays to become more productive
and successful members of society.
Addressing persistent economic disparity without compensatory discrimination allowed the government to attempt to generate greater inter-racial
equality without compromising its belief in meritocratic procedural equal
opportunity. Self-help policy also shifted responsibility for resolving disparity
from the government to the racial group, effectively shifting blame for intergroup disparity away from the economic and social system.
By rejecting direct involvement, the government implicitly reinforced the
notion that the current economic order is fair, and the meritocratic sorting
process is functioning well and objectively. The underlying suggestion is that
the only thing preventing equality of results is some set of deficiencies individuals possess when entering the system. Of course, this notion corresponds
to fair equal opportunity, with one critical difference. In Singapore, nonmeritocratic/unjustified disparity is not considered to be the result of inherited
advantages possessed by the well-off. Rather it is attributed to a set of inherent
disadvantages possessed by the under-performing group, presumably resulting from culture or some other exogenous source. Moreover, the elimination
of these deficiencies is not considered the responsibility of the government or
society as a whole but of the under-performing group itself.
Expansion of self help
By the late 1980s, the Mendaki experiment was declared a success. The period
since Mendakis formation coincided with dramatic improvements in relative
Malay educational performance (see p. 101) and absolute economic outcomes. Although a direct causal relationship has not been established,
Mendaki was given a great deal of credit for this change in fortune. As a result,
Mendaki was encouraged to expand beyond its educational focus to include
economic and social development at all levels of the Malay community.17
Mendaki thus recast itself as a sort of comprehensive race-specific welfare
organization.
Because of the seeming success of Mendaki and the philosophical opposition
to differential treatment for the components of Singapores multiracial

Singapores approach to race and inequality 99


society, the government felt pressure to form self-help organizations for all
racial groups. Although the Malays relative economic position had worsened
during the 1980s, it was felt that the Malay improvements in the lowest-income
brackets could be extended to other under-performing groups, such as dialect
speaking Chinese. Accordingly, the Eurasian Association (EA) was activated
in 1989, followed by the Singapore Indian Development Association (SINDA)
in 1990 and the Chinese Development Assistance Council (CDAC) in 1992.
All groups are funded much like Mendaki, through monthly CPF deductions
from members of the racial group and by a limited government matching
plan.18
Providing self-help assistance to all racial communities completed the shift
to fair equal opportunity as the disadvantaged (yet meritorious) individuals of
each group would, theoretically, be given the start needed to compete. The
government believes that this decentralized, almost privatized, form of
welfare is the most efficient way to deal with inter-group inequality, as it
harnesses the racial communities desire to help itself while preserving
procedural equality. Of course, this approach also represents a shift away from
ameliorating inter-group disparity directly and toward using racial affiliation
as the medium for addressing more general inequality. A decrease in general
inequality presumably is assumed to have positive implications for inter-racial
parity. However, the structure of self-help groups may prevent this from being
the case.
Although the three new self-help organizations have programs and philosophies similar to those of Mendaki, a difference in program quality already has
begun to emerge. Although CDAC is the youngest self-help organization, it is
quickly overtaking Mendaki as the most comprehensive development
program. The combination of monthly automatic payments from a much
greater percentage of the population and a much larger pool of rich potential
donors has given CDAC a substantial resource advantage over the other selfhelp groups. This advantage is readily visible in the breadth and quality of
programs CDAC already offers.19
Assuming that self-help is indeed an efficient and effective means of
improving performance within Singapores racial groups, CDACs success
may prove dangerous for the goal of inter-group economic parity. The
tremendous resource advantages that CDAC enjoys could transform it into a
much more powerful and effective organization than Mendaki, SINDA, or the
EA. If this corresponds to greater improvements in the Chinese economic
status relative to Malays, Indians, and Eurasians, it could mean even wider
inter-racial economic gaps.

Housing policy
Although housing policy was not explicitly designed as a social equalizing
measure, it does have a powerful leveling effect, particularly when viewed
within the context of a fair meritocracy. After being ousted from Malaya,

100 R. Quinn Moore


Singaporean policy was driven by survival and fear of cultural, political, and
economic nonviability. Because Housing and Development Board (HDB)
policy was a means of solving the diverse problems of eliminating Singapores
slums, improving its international image, decreasing the chance of racial or
political unrest, creating a sense of national loyalty, and engineering a strong
work ethic, HDB housing became a cornerstone of the ruling Political Action
Partys (PAP) plan for Singapores development: 87 percent of Singapores
population lives in one of the monolithic high-rise HDB estates, while the
remaining 13 percent live in exclusive, extremely expensive private dwellings.
While HDB policy does involve some degree of wealth redistribution, the
intent is not the benevolent creation of general equality; rather the goal is to
create the conditions under which Singapore could survive and prosper.20
More specifically, HDB policy was a social investment that was designed to
break up disruptive central-city slums, eliminate racial enclaves, generate a
sense of national loyalty, and mold people into what the PAP considered to be
the ideal workforce.21
This investment did have a cost, notably the potential for the feared welfarelike dependency tendencies that the PAP believed could result from public
housing. Although the PAP did not intend HDB policy as a welfare measure, it
recognized that it could have welfare-like side effects. Thus the government
made a strong effort to structure HDB policy to avoid such outcomes. This
effort included making apartments an asset to be purchased and not a right,
differentiating quality (in terms of number of rooms) and cost, and
encouraging mobility among quality levels.22 These measures were intended
to make the public housing market similar to the free market while allowing
the government to pursue the goals associated with public housing.
Public housing has had an undeniable positive effect in eliminating substandard housing and achieving a degree of environmental equality across racial
and social groups. HDB subsidy programs have been structured cleverly to
assure that all Singaporeans have the opportunity to secure housing while
those who do not need subsidies do not receive them. In addition to the subsidy
provided on all apartments purchased directly from HDB, subsidized loans
are available for both direct and open market HDB purchases.23 Low-income
families have access to HDB rental subsidies, and subsidized 3-room apartments.24 All programs have household income ceilings, and most require that
applicants apply with their family nucleus and not own any other private
property.25 No person can receive more than two housing subsidies in their
lifetime.
These programs seem to be having their desired effect as HDBs have
attracted an increasing percentage of the population (Table 6.2). Moreover,
HDB subsidies have allowed home ownership to increase dramatically.
Malays, in particular, seem to have benefited from these subsidies; 92.3
percent of Malay households own their homes today while fewer than 50
percent did in 1980. Malays do tend to have larger families and live in smaller
apartments (Table 6.2), but the increase in home ownership is nonetheless
indicative of the success of HDB policy.

Singapores approach to race and inequality 101


Table 6.2 Household type, household size, and household ownership by race,
1980 and 1990
Chinese

Malay

Indian

Other

1980

1990

1980

1990

1980

1990

1980 1990

69.5
20.7
33.3
11.5
2.8
1.2
11.3
19.1

83.2
8.0
33.7
27.3
13.5
0.7
12.3
4.5

72.0
30.6
32.7
7.6
0.6
0.5
2.6
25.4

96.6
7.1
49.7
30.4
9.3
0.1
1.6
1.8

56.1
21.4
21.8
10.2
1.2
1.5
13.2
30.7

83.7
12.6
31.5
25.0
13.6
1.0
10.6
5.7

43.2
8.5
18.0
10.3
5.2
1.2
46.4
10.4

57.7
4.8
19.1
18.3
14.7
0.8
34.3
8.0

Persons per household 4.8


Ownership rate
61.9

4.2
87.5

5.5
49.7

4.7
92.3

4.3
42.2

4.2
80.9

3.8
57.2

3.8
74.8

HDB Flat
1 and 2-room
3-room
4-room
5-room
Other
Private houses and flats
Othera

Source: Department of Statistics (1994b: 21); Department of Statistics (1992: xiv, 637).
Note
a Includes shop houses, zinc roof houses and other types of housing.

In addition to providing the opportunity for secure housing, HDB estates


are racially integrated. HDB policy requires that each building be no more
than 87 percent Chinese, 25 percent Malay, or 13 percent Indian and Other.26
If a group exceeds this percentage, the building is deemed a racial enclave
and housing unit sales to the over-represented group are restricted.27 This
integration ensures that people of all racial groups and economic classes grow
up in relatively similar environments in terms of housing quality, services
provided, cultural opportunities, and, to a lesser extent, primary school
quality.28 If one believes in the primacy of nurture over nature in human
development, this environmental equality is perhaps the most important
means of leveling the societal playing field. The leveling effect seems even
more powerful when this system is compared to other countries (the USA,
Brazil, India, etc.) where disadvantaged groups tend to live and remain in
deteriorating, service-deficient, crime-ridden neighborhoods.

The educational system


After the proverbial playing field has been leveled by ethnic self-help groups
and the public housing program, the educational system ostensibly streams
individuals to the appropriate socio-economic position by objectively assessing their level of merit. The educational system is the primary engine driving
Singapores meritocratic sorting process. The other fundamental national
ideal, multiracialism, is also deeply imbedded in the system, since schooling is
the means of establishing multilingualism and insuring that the appropriate
cultural ballast is imparted to all citizens. Although establishing a fair meritocracy and a harmonious multiracial society have been constant underlying
goals of the educational system since independence, it is questionable whether

102 R. Quinn Moore


these goals have been met. As a result of certain structural inequalities in the
educational system and a general social bias toward the Chinese, Chinese
students seem to enjoy an educational advantage that contributes to their
disproportionate economic success.
Streaming exams and pass rate differences
The government has used the educational system to foster multiracialism
through multilingualism and to instill a national ideology through a standardized state-approved curriculum. However, Lee also saw education as an
avenue towards establishing an ideal economic culture where the talented and
hard-working were to be identified, carefully developed, and given the incentive to achieve maximum production. A very strong emphasis was placed
on cultivating an elite, since it was felt that these individuals would lead
development.
Consistent with this ideology, the educational system began a system of
sorting in 1960. A streaming exam, the Primary School Leaving Exam (PSLE),
was to be given at the end of six years of schooling, after which the top 20
percent were identified as the elite, and sent on to the academic stream where
they could be molded into economic and political leaders.29 The remaining
students were channeled into a much less prestigious vocational stream.
As the educational system has evolved, additional streaming exams have
been added. Currently, streaming takes place four times, once after three
years of primary school, the PSLE after an additional 35 years of primary
school, the O Level (and N Level for lower-stream students) after secondary
school, and finally the A Level after the pre-university stage. These exams
place students in a stream deemed appropriate to their intellectual level. Thus
they ostensibly allow schools to cater to students specific needs and keep them
in the educational system longer. In addition, they allow the government to
focus disproportionate educational resources on the students identified as the
nations elite at an earlier age.30 Elite-oriented funding continues at all levels
of the system and is particularly concentrated on tertiary education, which
is, for practical purposes, available only to those initially channeled to the
high streams.
Study of streaming exam pass rates illuminates many characteristics of the
educational system and of Singaporean society. The most glaring feature is the
pattern of stark differences in pass rates by race (Table 6.3).31 The O Level
pass rates are particularly disturbing, since they show that 91.6 percent of
Chinese students qualified to move on to pre-university or a polytechnic, while
nearly 25 percent of Malay students did not even earn their secondary school
certificate.
The PSLE scores provide some hope, as they indicate some convergence in
scores. However, such hope may be specious as the Malay student cohort that
generated a rise in PSLE pass rates in 1991 generated a fall in the O Level pass
rate in 1995. Moreover, these results show only overall qualification for

Singapores approach to race and inequality 103


Table 6.3 Streaming exam pass rates by race, 1987, 1990, and 1993 (percent)
Race

Chinese
Malay
Indian
Other

3 O Levelsa

PSLE

5 O Levelsb

1987

1991

1995

1987

1991

1995

1987

1990

1993

89.7
70.7
80.5
88.3

92.9
75.3
81.3
84.4

97.4
90.1
90.9
95.5

90.0
78.2
81.9
85.8

91.5
79.8
82.4
83.9

92.9
75.6
85.1
86.9

86.9
44.1
55.5
66.5

89.2
55.5
63.7
75.1

91.4
65.6
74.7
81.2

Source: Ministry of Education.


Notes
a By passing 3 O Levels, a student earns a Secondary School Certificate.
b By passing 5 O Levels, a student qualifies for pre-University or a Polytechnic.

secondary school (with the PSLE) and pre-university (with the O Level). They
do not show the stream students are tracked into within an educational level.
This is significant because the educational system is specifically designed to
provide a higher-quality education for high-performing students, which may
explain why a rise in PSLE rates does not necessarily later translate into a rise
in O Level pass rates.
Sharply unequal inter-racial performance on streaming exams ultimately
manifests itself in the tertiary level of the educational system, where Chinese
students are grossly over-represented. In 1990, Chinese students constituted
90.4 percent of the university population while Malays and Indians made up
3.5 and 4.8 percent, respectively (Department of Statistics 1993b: xvi).32 Since
university graduates earn 227 percent more than upper secondary graduates
(Department of Statistics 1993a: 19), the over-representation of Chinese
students in the university undoubtedly will continue to have negative effects
on the future inter-racial distribution of income.
Explanations
In a fair multiracial meritocracy, the premise is that a social hierarchy is
necessary and desirable. Fairness does not lead to egalitarianism but to what is
believed to be a justly stratified society. Thus, the educational systems focus
on the cultivation of the elite must, for the moment, be taken as a necessary
and correct policy. Since stratification is the goal of the educational system,
the real question in assessing the success of sorting mechanisms from the
Singaporean perspective is: Does the system assess merit fairly and
objectively, regardless of class and ethnicity? If the answer is no, the
implications go far beyond the educational system, casting doubt on whether
the Singaporean economy is truly fair, multiracially oriented, or meritocratic.
Evidence presented in the previous section showed that the Chinese
significantly outperform Indians and Malays in streaming exams, resulting in
Chinese over-representation in tertiary education. These differentials could

104 R. Quinn Moore


be explained using Lees distasteful genetic arguments or, more logically, by
the environmental/nurture argument that well-educated, more affluent
parents are able to give educational advantages to their children. Of course,
the latter argument would be inconsistent with the ideal of fair meritocracy,
where individuals are judged and rewarded on their achieved merit rather
than inherited advantage or disadvantage.
The environmental argument is undoubtedly a part of the explanation for
disproportionately high Chinese education performance given the systems
emphasis on early streaming. However, there are other structural characteristics of the educational system that favor the Chinese and the relatively rich,
including the extra educational opportunities available to the affluent, the
trend toward privatization of education, the Special Assistance Plan (SAP),
and the unavoidable effects of racial stereotypes on economic performance.
Advantages of the rich
Perhaps the greatest bias in Singaporean education comes from the advantages available to the rich. Although these advantages are not unique to
Singapore and, indeed, may be a universal social characteristic, they are worth
mentioning since they affect the extent to which the system is truly fair and
meritocratic. Since the Chinese on average are disproportionately more
advantaged than Malays or Indians, and these advantages have implications
for the racial distribution of opportunity.
One of wealths tangible educational advantages in Singapore arises from
the emphasis on private, extra-curricular tutorial services. Because the educational system has become so competitive and economic success is almost
wholly determined by educational success, there has been an ever-increasing
demand for extra instruction outside of school. Private tuition is so common
that it is now almost expected. In securing high-quality tuition, the rich have an
obvious advantage money that gives their children an advantage in school
performance. However, this advantage has recently been partially countered
by the emergence of tutorial programs sponsored by self-help groups. All of
these tutorial programs have some provision that allows low-income families
to send their children at no or low cost.
Another serious educational advantage of wealth comes from insufficient
university places and the increasing trend toward reducing educational
subsidies. The first advantage is explained simply. There are more qualified
students than positions at the national universities, particularly in high-paying
fields.33 The high achieving students that are turned away are faced with three
optionsattend one of the considerably less prestigious Polytechnics, attend
the Singapore Institute of Management (a new, small private university), or
leave Singapore. The third option is quite popular as 34 percent of all
university students are studying outside of Singapore, the vast majority of
whom are Chinese.34 Since there is no public assistance for overseas or private
study, these options are available only to the rich. Given the substantial

Singapores approach to race and inequality 105


financial reward for university education, an insufficient supply of university
places is a serious problem and a serious disadvantage for those who cannot
afford alternate university education.
Even if more university places were created, it is possible that the effects
would be nullified by another trend reducing educational subsidies and
bringing fees closer to the actual cost of education. As with housing, government subsidies to education were never intended as a form of welfare. Instead
they were meant as a means of achieving national goals and increasing
production to the point that subsidies were no longer necessary. Because of
the high returns to university education, the government has decided that the
time is right to reduce subsidies and increase university fees. The argument is
that it is unfair for those who are going to be making the highest incomes to
receive a subsidy financed by the general taxpayer. This sound argument has
even greater validity in the context of a multiracial society where most of those
tracked into the universities are affluent Chinese.
The problem with this otherwise logical trend comes when poor students
make it through the system and are faced with these new, higher fees. To
mitigate this, the government has set up a Tuition Loan Fund that defers
interest payment until after graduation, but these loans cover only 50 percent
of fees at maximum. The rest of the fees and expenses usually come from
personal funds, private loans, or loans from the familys CPF account. These
sources are likely to be negligible or non-existent to poor families. However,
self-help group loans and bursary programs and other loan sources have
recently emerged as an encouraging response to this problem.
Advantages specific to Chinese students
In addition to being disproportionately rich and thus receiving a disproportionate amount of the advantages of the educational system associated with
affluence, the Chinese have two other unique advantages in the educational
system, namely the Special Assistance Plan (SAP) and the stereotypes
associated with being Chinese in Singapore. The SAP is the only exception
made to equal treatment of the races in the educational system. Established in
1980, the SAP converted some secondary schools into very prestigious
bilingual Mandarin and English schools that place a strong emphasis on
instilling Chinese culture. The schools are extremely well funded and accept
only the top 8 percent of Chinese performers on the PSLE.
The existence of elite Chinese schools enhanced Malay and Indian fears of a
culturally Chinese, rather than a multiracial, Singapore. As a part of the
engine of meritocracy, SAP schools also call into question the inter-racial
fairness of the educational system, particularly within the context of an
explicitly elitist educational system. It is very difficult to justify different
treatment of the academically elite Chinese from elite Indian or Malay
students, particularly in a multiracial meritocracy. SAP schools are not even
billed as separate but equal, as the SAP schools are unarguably better

106 R. Quinn Moore


funded and more prestigious than regular schools. Moreover, similar Malay
and Tamil schools were not created.
The other advantage enjoyed by Chinese students is that of the positive
Chinese stereotype in Singapore. As noted above, the Chinese are generally
considered to be intelligent and hard-working, a fact that undoubtedly
provides Chinese students with self-confidence and a bonus in educators
assumptions about their capabilities. In contrast, Malay students must deal
with stereotypes that they are lazy and unintelligent. Li (1989) provides
examples of the salient effects stereotypes have on educational opportunities,
such as scheduling high-level courses at the same time as mandatory Malay
language courses, thus forcing Malay students to take lower-track courses
regardless of their scores. Although it is difficult to assess the extent to which
these stereotypes affect treatment of Malay students, their effects cannot be
dismissed. Malay students have a different starting line in the eyes of educators, which impedes the process that determines order in the meritocracy.

Net effect of education as a fair sorting mechanism


Now that the structure and characteristics of the educational system have been
described, we can evaluate the question at hand: Does the Singaporean
multiracial meritocratic system sort individuals fairly and objectively solely on
the basis of merit? Given the various educational advantages of being
wealthy, the bias of the SAP, and institutional racism, the answer seems to be
no. But before condemning Singapores efforts at creating a fair multiracial
meritocracy altogether, it is necessary to place the educational system in the
context of Singapores other social policies and to compare this sum package
with other systems in the world.
When combined with self-help groups and housing policy, many of the
obvious shortcomings of the educational system are mitigated, at least
partially. Public housing, particularly since HDB complexes have been racially
integrated, serves to counter many of the environmental advantages of the
wealthy. Although the wealth and education level of the parents assuredly has
an effect on their childrens performance, most children are raised in very
similar physical environments as a part of a very diverse community. Children
of poor, less-educated families are not isolated in deteriorating neighborhoods to the extent that they would be in the USA, Brazil, or virtually any
other country in the world. Rather they live in well-integrated, wellmaintained, well-served communities.
Self-help groups also counter the inequalities of the educational system by
providing tutorial programs, extra-curricular academic and social activities, as
well as education bursaries and loan programs. It is difficult to assess the
effectiveness of these programs, but it is perhaps not coincidental that Malay
students have been closing the sizeable PSLE score gap since the mid-1980s,
shortly after the establishment of Mendaki. Both Malay and Indian PSLE pass
scores began to converge with Chinese scores since the early 1990s, shortly

Singapores approach to race and inequality 107


after the expansion of self-help group policy. If this convergence continues in
the PSLE and extends to the upper streaming exams as minority high scorers
are tracked into higher streams, the educational system could have a very
different face in the coming years, provided that CDACs funding does not
give Chinese students an additional advantage.
Of course, there are still serious flaws in the fairness of the educational
system. Self-help groups and housing policy cannot compensate for all of the
systems inequities, nor are these policies without inequities of their own.
Racism and the advantages of being rich have impeded and will continue to
impede the truly fair functioning of Singapores meritocratic sorting process.
But is there anywhere where wealth and race do not affect levels of success
and opportunity? It seems unlikely. Singapore is no exception, but it has
proved itself to be unusual, if not unique, in taking concrete policy action to try
to level the playing field and objectively determine merit. When compared
with the USAs half-hearted attempt at affirmative action and grossly inequitable educational system, Malaysias failed attempt at generating equality of
results through racial preference, and other unsuccessful or nonexistent
attempts to redress racial inequality, Singapores flawed efforts at creating a
fair multiracial meritocracy begin to look more impressive.

Notes
1 This diversity is multiplied greatly by extensive diversity within each group. The
Chinese population is about 30 percent Hokkien, 17 percent Teochew, 15 percent
Cantonese, 5 percent Hainanese and 5 percent Hakka (Clammer 1985: 91). The
Indian category reflects all of the national, religious, and ethnic diversity of
South Asia. Malays are not marked by religious or linguistic diversity. Despite the
name, the small Eurasian group consists of the eclectic group of Portuguese,
British, Arab, South-East Asians, and mixed-race individuals that used to be
referred to as Other.
2 Note that race is not the only important category within which disparity exists.
Within the Chinese and Indian groups there is strong division along linguistic and
religious lines. An exploration of Singapores religious and linguistic hierarchy
also would be useful; however, since the focus of government programs and
popular sentiment is on race, so too is the focus of this chapter.
3 Reporting income by household hides some of the inter-racial income gap for
Malays, as the mean household size for Malays was 4.7 in 1990 v. 4.2 for both
Chinese and Indians (Department of Statistics 1993b: xv).
4 See Department of Statistics 1992: 6978. Table 6.1 does not show the under $500
per month category because the 1980 Census did not report income by race and
the 1990 Census reported only the 1980 figures given.
5 Indian and Chinese Ginis also dropped (from 0.490 to 0.423 and from 0.477 to
0.423, respectively) (Department of Statistics 1992: 10).
6 The Indian labor force participation rate was 70.4 percent in 1990, up from 67.6
percent in 1980. The Chinese rate increased from 62.6 percent to 65.1 percent
while the Malay rate fell from 64.7 to 62.9 percent (Department of Statistics
1993b: xvi). The drop in Malay labor force participation makes their rise in
household income even more impressive.
7 Income per worker is available in the 1990 Census, but it includes nonresident
migrant workers which exaggerates the gap between Indian and Chinese wages.

108 R. Quinn Moore


8 This also is shown more clearly with the complete income data available in the
1990 Census reports, which provide categories up to $7,000 per month. These
tables show that the proportion of Chinese households increases in each
ascending income category (Department of Statistics 1992: 6978). The 1980
Census did not report income by race and the 1990 Census reported only the 1980
figures given.
9 This is reinforced by the belief that the economic success of the Chinese is based
on genetic superiority. This belief has manifested itself in several eugenics
programs (Tamney 1996), led to the dysfunction of numerous ostensibly raceneutral policies and is undoubtedly a source of economic discrimination against
Malays and Indians.
10 See Tremewan (1994: 95); Hill and Lian (1995: 84); Clammer (1985: 144); Li
(1989: 108), etc.
11 See Vasil (1995: 119) and Tamney (1996: 102) among others.
12 Severe racial tension surrounded separation from the Federation of Malaya. In
the resulting incidents of racial violence in 1950, 1964, and 1969, Singapore
experienced what the government classifies as race riots. For more on these
riots see Hill and Lian (1995).
13 For discussions related to this decentralization see Li (l989); Brown (1993); Lai
(1995); Tamney (1996).
14 The precursors to community-based self-help organizations emerged in the late
1960s, soon after Singapore separated from the Federation of Malaya in 1965 (see
Tan 1995: 343).
15 For a more complete discussion of Mendakis history and current projects see
their web site (Mendaki 1999). Information in this discussion was also drawn from
Li (1989); Lai (1995); Tan (1995); Vasil (1995).
16 These donations are technically voluntary since workers can have the deductions
stopped.
17 Because of reorganization, Mendaki now has three divisions: Education, Social
and Cultural Affairs, and Economic Development. One significant change is that
responsibility for the free tertiary education program, a relic from the Federation
of Malaya years, has been transferred to Mendaki. A one-time sum was given to
Mendaki by the government, which was then used to set up the Tertiary Tuition
Fee Subsidy. Instead of giving free education to all Malays, this subsidy pays 100
percent of fees for families whose monthly income is below $2,000 and 70 percent
of fees for families whose monthly income is between $2,000 and $3,000 (Mendaki
1999). This transfer represented the next step in eliminating perceived Malay
dependence and in fostering community responsibility. It also allowed the government to shed itself of a pre-independence political anachronism that had become
increasingly expensive with growing Malay tertiary enrollment
18 For example, SINDAs total budget in 1997 was S$5,529,511, of which 59.6 percent came from CPF deductions, 27.1 percent from government subvention,
11.0 percent from tutorial fees, and 2.3 percent came from other sources
(SINDALink 1999).
19 The educational program, which is generally considered to be the most important
function of self-help groups in terms of alleviating future disparity, serves as a
good point of comparison. CDACs educational program revolves around its
seven Student Service Centers (SSCs), all established between November 1993
and November 1996. These centers now serve 12,695 student and offer arts and
craft classes, planned outings, homework clinics, and tutorial programs at all
levels in all subjects. In addition to the SSCs, tutorials are available at public
schools for those who are failing or nearly failing a subject or for those whose
household monthly income is less than $2,000 (CDAC 1999). Neither Mendaki
nor SINDA have SSCs. The tutorial programs offered by Mendaki and SINDA,

Singapores approach to race and inequality 109

20
21

22
23

24

25
26
27

28

which are comparable to CDACs school-based tutorial program, serve 9,500 and
2,800 students, respectively. It is both impressive and suggestive that in three
years CDAC established the facilities to serve more students in its SSC program
alone than even Mendaki, which has conducted tutorial programs since 1981.
For further discussion of the political reasoning behind HDB policy, see Hill and
Lian (1995).
HDB policy offered a solution to the lack of inherent national loyalty by
facilitating the purchase of a home. The government felt that if one owns an asset
in the country, one would stand to defend it (Wong and Yeh 1985: 231).
Moreover, the PAP felt that Singapore must develop a thoroughly disciplined
workforce that would both attract foreign capital and encourage domestic capital
formation. An efficient way to encourage this discipline was to encourage the
population to place itself in debt to the government (Tremewan 1994: 58; Hill and
Lian 1995: 121). This long-term financial commitment also ensured a strong
incentive to seek and maintain full-time wage labor. After all, the painless road
to property ownership ties a family into debt and credit relations that require
them to work steadily for years to come (Salaff 1988: 243). In addition to creating
a commitment to working, the PAP felt that giving people something concrete to
work toward would give them focus, drive, and a greater capacity for hard work. A
stable, high-quality living environment also was believed to have a positive effect
on worker attitudes.
Hill and Lian (1995: 135).
This subsidy applies only to new flats as only new flats are purchased directly from
HDB. It is difficult to assess the amount of this subsidy as HDB flats can not be
sold on the open market until the owner has occupied the flat for at least 5 years.
For a rough approximation, the market valuation for flats at the most recently
built HDB estate in which owners can sell their property averaged S$293,400 for
4-room flats and S$413,800 for 5-room flats in the third quarter of 1998. The
average HDB selling price for new flats ranged fromS$137,900 to S$158,500 for 4room flats and from S$233,500 to $270,300 for 5-room flats (HDB InfoWEB
1999). A much smaller subsidy is available for open market purchases. This
subsidy is set at S$39,000 for families or S$49,000 for families using the subsidy to
move near parents or children. In addition to these subsidies, loans are available
up to 80 percent of the purchase price (HDB InfoWEB 1999).
Three-room flats are being phased out by HDB, as no new HDB estates have 3room flats. The subsidized 3-room flat program involves HDB repurchasing 3room flats on the open market and then reselling them to low-income families at a
subsidized rate.
With the exception of low-income programs, the household income ceiling is set
at the relatively high rate of S$8,000 per month. This ceiling applies to families
purchasing flats on the open market as well.
There is also a requirement that no neighborhood be more than 84 percent
Chinese, 22 percent Malay or 10 percent Indian and Eurasian.
See Lai (1995: 122). The restriction operates by allowing members of the overrepresented group to sell their housing unit to anyone, while members of the other
groups can sell only to the non-over-represented groups. Thus the ethnic make up
is not permitted to worsen. The policy structure can make it more difficult for
minorities living in a Chinese enclave to find a buyer since they are restricted to
selling only to non-Chinese. It should be noted that the policy of racial housing
quotas also serves to break up the minority electorate and also could be seen as
part of a government effort to prevent the development of a Malay-led opposition. See Tremewan (1994: 143) for further discussion of the government stance
toward minority opposition.
Location is one of several factors that play a role in determining which school a
child attends. Test scores play perhaps the most important role.

110 R. Quinn Moore


29 See Tremewan (1994: 84).
30 See Tremewan (1994: 111).
31 PSLE rates can be broken down by subject. Although gaps have narrowed
remarkably in English since 1990, Chinese students receive by far the highest
scores in math and science, followed by Indians and then Malays. Since these
subjects are the focus of the educational system and become increasingly more so
as students progress, pass rate gaps may illuminate significant skill differentials
belied by the convergence of ethnic qualification for secondary school.
32 It is also worth noting that Malays and Indians that do go to university in Singapore are over-represented in the much less prestigious Arts and Social Sciences
faculty. See Department of Statistics (1994a: 15).
33 The information on funding of tertiary education comes from Shantakumar
(1992).
34 Department of Statistics (1993a: 21). Chinese students make up 85.3 percent of
the population studying in universities abroad.

References
Ang, I. and J. Stratton (1995) The Singapore Way of Multiculturalism: Western
Concepts/Asian Cultures, SOJOURN, 10: 1, 6589.
Asher, M. (1993) Planning for the Future: The Welfare System in a New Phase of
Development, in Gary Rodan (ed.), Singapore Changes Guard: Social, Political
and Economic Direction in the 1990s, Longman Cheshire, New York.
Barth, J. I. (1996) A Context to Take for Granted? Literary Negotiations of Eurasian
Identity, Masters Thesis, Murdoch University.
Brown, D. (1993) The Corporatist Management of Ethnicity in Contemporary
Singapore, in Gary Rodan (ed.), Singapore Changes Guard: Social, Political and
Economic Direction in the 1990s, Longman Cheshire, New York.
Chinese Development Assistance Council (1999) <A HREF=http://home.cdac.
org.sg/english/guanyu.html></A>
Clammer, J. (1985) Ethnicity and the Classification of Social Differences in Plural
Societies: A Perspective from Singapore, Journal of Asian and African Studies, 20:
34, 14155.
Department of Statistics (1981) Singapore Census of Population 1980, Department of
Statistics, Singapore.
Department of Statistics (1992) Census of Population 1990: Households and Housing:
Statistical Release 2, SNP Publishers, Singapore.
Department of Statistics (1993a) Census of Population 1990: Literacy, Languages
Spoken and Education: Statistical Release 3, SNP Publishers, Singapore.
Department of Statistics (1993b) Census of Population 1990: Economic Characteristics: Statistical Release 4, SNP Publishers, Singapore.
Department of Statistics (1994a) Singapore Census of Population 1990: Transport and
Geographic Distribution: Statistical Release 5, SNP Publishers, Singapore.
Department of Statistics (1994b) Singapore Census of Population 1990: Religion,
Childcare and Leisure Activities: Statistical Release 6, SNP Publishers, Singapore.
HDB InfoWEB (1999) <A HREF=http://www.hdb.gov.sg></A>
Hill, M. and Lian Kwen Fee (1995) The Politics of Nation Building and Citizenship in
Singapore, Routledge, London.
Lai Ah Eng (1995) Meanings of Multiethnicity: A Case Study of Ethnicity and Ethnic
Relations in Singapore, Oxford University Press, Kuala Lumpur.

Singapores approach to race and inequality 111


Li, Tania (1989) Malays in Singapore: Culture, Economy, and Ideology, Oxford
University Press, Singapore.
Lim, Linda Yuen-Ching (1989) Social Welfare, in K. S. Sandhu and P. Wheatley
(eds), Management of Success: The Moulding of Modern Singapore, Institute of
Southeast Asian Studies, Singapore.
Mendaki (1999) <A HREF=http://www.mendaki.org.sg></A>
Salaff, J. W. (1988) State and Family in Singapore: Restructuring an Industrial Society,
Institute of Southeast Asian Studies, Singapore.
Tamney, J. B. (1996) The Struggle Over Singapores Soul: Western Modernization and
Asian Culture, Walter de Gruyter, Berlin.
Tan, J. (1995) Joint GovernmentMalay Community Efforts to Improve Malay
Educational Achievement in Singapore, Comparative Education, 31: 3, 33953.
Tremewan, C. (1994) The Political Economy of Social Control in Singapore, St Martins
Press, New York.
Shantakumar, G. (1992) Student Loans for Higher Education in Singapore: Some
Observations, Higher Education, 23, 40524.
SINDALink (1999) <A HREF=http://www.sinda.org.sg/intro.htm></A>
Vasil, R. K. (1995) Asianising Singapore: The PAPs Management of Ethnicity,
Heinemann Asia, Singapore.
Wong, A. K. and Yeh, S. H. K. (1985) Housing a Nation: 25 Years of Public Housing in
Singapore, Maruzen Asia, Singapore.

Recasting economic inequality


Ashwini Deshpande*

Introduction
Insights into the economic features of the Indian caste system, in its changing
manifestations from the ancient through the colonial to the contemporary,
come primarily from the vast pool of research that has been undertaken by
sociologists, historians, political scientists almost all social scientists except
economists. One would have expected economists to seize upon the unique
economic features of the system as tools for theoretical modeling or as the
subject matter for empirical work to examine the continuing relevance, or
otherwise, of the occupational structure dictated by the caste system. Faced
with analyzing persistent under-development in India, the primary focus of
economic research on inequality and poverty has been on the overall trends.
Inter-group disparity is just about coming to the fore in shaping the contours
of research on inequality so as to gain deeper insights into the pattern of
stratification.
Inter-group disparity in India is multifaceted: religion, and region, not to
mention gender and class, are all very important descriptors of inter-group
disparity. I focus on caste because of the enduring relevance of caste categories
in contemporary India, and the presence of caste-based affirmative action
policies enshrined in the Constitution of independent India. Also, while caste
is conventionally associated with Hinduism, all major religions in India exhibit
features of caste divisions. In other papers (Deshpande 2000, 2001a, 2001b), I
examine empirically the economic aspects of caste inequality in independent
India. This companion study critically reviews the existing economic literature
that provides a backdrop for the empirical investigation.

What contribution can economists make?


Deshpande (2001a) outlines the imperatives behind an economic enquiry,
arguing that the (non-economic) literature frequently makes economic assertions while defining the contemporary nature of caste inequality. The validity
of these propositions is not always apparent on the basis of evidence
presented. For instance, Mayer (1996) asserts that All this has meant a
general disengagement of occupation from its association with a particular

Recasting economic inequality 113


caste, and with any ranking which might stem from this (1996: 49). While it is
true that occupational structure has over time undergone a profound change,
the caste divisions have remained more or less the same. Additionally, the
post-independence Constitution guarantees each Indian the freedom of
choice of occupations. Without fear of contradiction, one can uphold this
statement for several castes; the erstwhile warrior castes will not necessarily
choose the military as a career, and the military is no longer the preserve of
certain castes. It is also true that any kind of skill acquisition (for example,
admission to a management or a computer course, or to a dental school) is not
contingent upon ones caste.
However, at a deeper level, to gain insight into the nature of change in the
caste system an investigation into ancient occupations that have survived
changes in economic structure ( i.e. priests in temples, scavengers, traditional
moneylenders, and the whole spectrum of agricultural jobs) is required. Are
these jobs still performed by castes to whom they were traditionally allocated,
or is the reshuffling of the deck total i.e. is the modern occupational structure
randomly distributed across castes? It is likely that we may find more
continuity than change.
What happens to those who are released from traditional jobs because those
occupations are vanishing? Is it true that lower castes tend to get absorbed into
lower-paying and less prestigious modern occupations and higher castes get
concentrated at the upper end of the modern spectrum? If this is happening,
we would be witnessing the result of what can be termed cumulation of
advantage or privilege over the years (or its reverse, disadvantage or denial of
privilege). The following quote from Mencher (1974: 472) illustrates this
dichotomy: present day Chamars . . . though known as leather workers . . .
only a small proportion of caste members do this work . . . their major function
. . . to serve as a source of agricultural labor. The link between caste and
occupation can be broken, yet the overlap between caste and class can be
very strong.1 Also, why does the link break does the pull of economic
opportunities or the push of economic deprivation compel caste members to
seek other jobs? This issue is additionally complicated by the gender angle. In
Deshpande (2001b) I discuss how the responsibility of preserving traditional
occupations often falls on women while men seek alternative employment. In
this case, the contemporary situation could be regarded as a permutation of an
earlier caste structure where the link between caste and occupation may be
strong for some castes, weak for others, but the association between caste and
status or, more correctly, between caste and privilege persists. The
cumulative advantage of the upper castes has been so strong that they no
longer need an institutional structure of hereditary reservations in order to
perpetuate their privilege. An economic investigation into the caste
composition of the occupational structure can contribute to an objective
picture of the nature and degree of change.
Caste as an institution has several other facets that standard of living
indicators will not be able to capture. Since urban settings may witness far

114 Ashwini Deshpande


fewer overt instances of untouchability than more traditional rural settings, it
can be argued that caste is irrelevant. However, in a society in which
untouchability has been formally abolished for half a century, this should be
the least of the outcomes expected. It is thus not an exaggeration to state that
caste remains a powerful and potent force in Indian society, decisively shaping
the contours of social and political development.

What is caste inequality?


Before starting, it is necessary to clarify what I mean by caste inequality.
Caste in English translates two distinct concepts the Varna and the Jati.
Briefly, the Varna system divided the ancient Hindu society into initially four
(later five) distinct Varna (castes), that are mutually exclusive, hereditary,
endogamous and occupation-specific: Brahmins (priests and teachers),
Kshatriya (warriors and royalty), Vaisya (traders, merchants, moneylenders),
Sudras (those engaged in menial, lowly jobs) and those doing the most
despicable menial jobs, the Ati Sudra or the former untouchables.
The operative category that determines the contemporary social code,
however, is the Jati. There exist 2,0003,000 Jatis, that are also called castes
(and share the basic characteristics of the Varna), and it is tempting to think of
Jatis as mere sub-sets of Varna. However, Jatis follow a much more complex
system of hierarchy and rules of conduct towards each other. A one-to-one
correspondence between Jati and Varna (note the uncertainty in the number of
Jatis as opposed to the certainty in the number of Varnas) does not always exist
and thus it is not unusual for a given Jati to claim a coveted Varna status nor for
this claim to be disputed by other Jatis.
Since caste divisions are not dichotomous, the meaning of caste inequality is
not obvious analytically. Are we advocating pair-wise comparisons, technically
possible for the Varnas, but quite mind-boggling for the Jatis? And, for the
former, if people report the Jati as their caste, then we are left with the
herculean task of unraveling the complexity of the web of relationships
between individual Jatis and their Varna counterparts. Or, are we making a
plea for forcing a hierarchical ordering of the Jatis based on an economic
criterion alone for example, on the basis of a definition of standard of living?2
I would like to suggest a third course: that we can characterize inequality by
focusing on the sharpest contradiction, between those at the top and those at
the bottom of the caste pyramid (using either the Jati or the Varna criterion).
Data availability does not allow us to do that directly; however, there are three
broad divisions for which data are available: the Scheduled Castes (SCs),
Scheduled Tribes (STs) and Others (everyone else).3
Analytically, this three-way division of the data is appealing for the
convenience of making pair-wise comparisons. Its weakness lies in underestimating the relative disadvantage of the SCs since the Others is a very
large, heterogeneous category containing a whole range of castes, including
castes that are socially and economically not necessarily very distinct from the

Recasting economic inequality 115


SCs. If empirical studies establish inter-caste disparity between SCs and
Others it is reasonable to infer an even greater disparity between castes at the
two polar ends.

The economic literature on caste inequality


The literature on poverty and inequality in India is divided into two bodies of
work. One stream addresses issues related to poverty and inequality, but is
silent on the question of inter-group or inter-caste disparity.4 The other stream
focuses on caste and therefore, perforce, addresses certain aspects of
inequality, but offers few insights into the overall pattern of stratification.5
There is a third body of work that focuses on affirmative action, that would
benefit from quantitative studies, but given that few all-India studies exist it
relies on either case studies or state-level commission reports.
Identity, discrimination, and economic outcomes
The theoretical models that exist represent an eclectic mix, ranging from
statistical discrimination to Leontief-style inputoutput modeling. I will make
a brief attempt to link them together in the new conceptual framework of
neoclassical economics.
The field called the economics of rural organization that emerged as the
new neoclassical paradigm in the 1960s highlighted the role of institutions
when faced with transaction costs and imperfect information. The paper by
Akerlof (1984) falls into this tradition. Meanwhile, Hoff et al. (1993), suggest
that changes in the field of development economics since the 1960s can be
summed up as broadly constituting three traditions planning, the Institutionalist tradition, and the Chicago School. The economics of rural organization can be seen filling the gap between the latter two competing traditions,
within the overall neoclassical tradition. Beckers work on discrimination is a
legendary representative of the Chicago school; however, the reason that it is
not discussed in detail here is that it does not really focus on the Indian caste
system.
Akerlof (1984) provides, within a modified ArrowDebreu framework, an
explanation of segregated or caste economy which may be self -perpetuating.
It falls in the class of models that focus on identity and economic outcomes, i.e.
statistical discrimination through use of indicators. The paper discusses
distortions to the ArrowDebreu framework by the use of indicators which
owe their existence to social convention. This is to be distinguished from the
Chicago School that explains discrimination by a taste for discrimination
(Becker 1971: 14). An individual X will discriminate against Y simply because
he has a taste for it and he must act as if he were willing to pay something,
either directly or in the form of a reduced income, to be associated with some
person instead of others, emphasis in the original (1971: 14).6
In the Akerlofian statistical discrimination, all members of a given group

116 Ashwini Deshpande


(race or caste) are perceived as having equal ability, so that in a caste economy
the behavior of one member of society toward another is predicted by their
respective caste statuses (Akerlof 1984: 24). The identity of the agent as
perceived by other agents is seen as an indicator of merit and, in turn,
determines outcomes (italics mine). In a system where there are social costs
(for instance, sanctions in the form of being declared an outcaste) associated
with breaking traditional norms and practices, Akerlofs model demonstrates
the tendency to thwart change to the social code of a segregated society.7
This model is closer to the disadvantage model which is used to explain
racial disparity identity is seen as a set of characteristics attributed to an
individual that either explains how others would behave towards the individual (Akerlof 1984), or how the individual would behave in society (Akerlof
and Kranton 1998).
These models do not address the fundamental question of how these
assessments are formed. Are they based on averages that the group is presumed to possess? Assuming, temporarily, that the averages are accurately
estimated, then this means that the outliers in the group, specifically those
with attributes much higher than average, will suffer. However, beliefs about
the group frequency distribution and the true group frequency distribution
may differ widely. This difference would be driven by prejudice, but the
imperfect theoretical apparatus does not allow an evaluation of the process by
which indicators are formed, left as they are to social convention.
Turning to these models and the Indian caste system, one finds a whole
range of questions that are left unanswered. Why are the attitudes of the upper
castes towards the Dalits derogatory? Are they due to the fact that the Dalits
are genuinely inferior? If Dalits acquired superior human capital indicators
over time, would these attitudes change accordingly? Why are the upper
castes superior anyway? Is it due to their inherent characteristics, or to a
social institution that was created by the privileged to maintain their status? If
it is the latter, then the existence of discrimination would have very little to do
with either presumed or actual characteristics of the Dalits.
By focusing on a given individual (Akerlof and Kranton 1998), we overlook
conflicting social prescriptions. Social prescriptions are defined by the authors
as what actions are . . . appropriate and function as powerful motivations to
behavior (1998: 1). Are social prescriptions an aggregate of individual
prescriptions? Are there dominant prescriptions of privilege that determine
what social codes or norms ought to be? This is the classic problem of interpersonal comparisons.
Then comes the question of the identity A would like to possess, versus the
identity that society bestows upon A in the contemporary context of caste,
excellently summarized by the juxtaposition of the terms dalit and harijan
(the former a term of pride for untouchables, the latter, coined by Gandhi,
considered patronizing). Further, if A chooses to be nonconformist, an issue
that Akerlof and Kranton (1998) address, in adopting a deviant behavior in
terms of the prevalent social code, he or she may be acting true to their self-

Recasting economic inequality 117


perceived identity. Here we are entering a grey area. Rebellion and protest
take a myriad forms almost all forms are socially unacceptable, although
the degrees of unacceptability vary with the particular form.
Continuity and change
In the Akerlof (1984) model, while there is a theoretical possibility of an anticaste coalition succeeding in breaking free of the code, this possibility falls
victim to the free-rider problem. Akerlof writes usually the greatest rewards
go to those who do not break social customs . . . the models of statistical
discrimination and caste explain why economic rewards may follow those who
follow prevailing social customs. Lal (1988), in developing an economic
rationale for the Hindu social system, uses essentially the Akerlofian
argument (indeed, his model is a variant of the Akerlof model) to explain the
relative stability in the caste system.8
One can see other more powerful disincentives to the formation of such a
coalition: prejudice and the desire to perpetuate their domination and the
power to prevent such a coalition on the part of the upper castes, coupled with
fear of a backlash on the part of the lower castes. In this context, Kuran (1987)
argues that the system continues because the most oppressed are in fact its
supporters. This support could either be forced because of fear of reprisal, or
genuine, due to a mistaken fatalism. This formulation ignores huge chapters
of Indias history that is replete with social reform and religious protest against
the caste system (see Deshpande 2001b for details, of the Bhakti movement
that started in the eighthninth century AD). The Sikh revolt against Hinduism
was initially anti-caste, but with the formation of castes within the new religion,
Sikhism ended up with a situation no different from before. It is also argued that
a strong caste consciousness prevents the formation of a class consciousness.
In general, if construction of identity flows from a set of presumed characteristics, then can social change come if subjects of discrimination acquire the
socially desirable characteristics (assuming, of course, the highly unlikely
possibility that a well-formulated consensus exists on this)? Or would victims
of discrimination have to resort to protest (perhaps violent)? Can either legal
reform or external force (or both) be agents of change? We would like to know
how the Akerlof (1984) equilibrium would change if the indicators for the
Dalits improved over time.
The Akerlof model assumes a market setting. But Scovilles exercise (1996:
3856) exercise looks at caste as a system of human resource allocation as
one alternative to reliance on market mechanisms, arguing that this is a
situation where strongly non competitive labor market institutions have long
prevailed, . . . occupations are hereditary, compulsory and endogamous.
Scoville (1991) sought to formalize the relationships in such a caste economy.
While Akerlofs work focuses on the existence of a caste-ridden equilibrium
even under competitive conditions, Scovilles (1991) paper is concerned with
the production and distribution workings of such a caste economy, much in

118 Ashwini Deshpande


the fashion of Leontief, and with equilibrating adjustments taking place in the
size of several castes (1991: 49). Scoville (1991) constructs a Jajmani
matrix capturing some of the reciprocal obligations of the caste system.9 The
use of reciprocity has connotations of fairness or a fair exchange. The question
of production of surplus and who (which castes) appropriates it is completely
outside the purview of this model, as is the hierarchy and the exploitation
inherent in the caste system.
A basic assumption of Scovilles (1991) model is that demand for most
traditional goods and services is primarily driven by population. This ignores
the role played by purchasing power as a determinant of the size of the market.
It is difficult to claim that everyone in the Indian population has adequate
clothing, yet an increasing number of textile mills are closing because of a lack
of sufficient demand for basic types of cloth. The dynamic version of the model
focuses on population growth of different castes as a driving force behind
determining the elements of the matrix. While population growth is
undoubtedly important, it is difficult to be persuaded that it provides the key
dynamic behind the matrix assuming of course, that such an exercise can
adequately capture the essential features of the complex network of relationships structuring the caste system. Population growth in Scovilles (1991)
model is seen as a dynamic force determining demand for goods and services.
This is not a discussion about SC/ST/Other differentials in birth and age
specific death rates, or speed of demographic transition, etc., so there are no
insights into the trend in inter-caste inequality.
What is intriguing to observers is the degree of stability in caste relationships or the absence of institutional change (Scoville 1996: 390) where, in
terms of his earlier model, institutional change is defined as the change in the
definitions of the rows/columns or changes in the elements of the Jajmani
matrix. Scoville identifies three characteristics of labor market barriers that
ensure that institutional change in the caste labor market will be minimal or
nil. However, his matrix is based on traditional occupations; in the modern
occupational structure, heredity plays a much smaller direct role (in the sense
of directing the exact profession that will be chosen by a given individual) and
labor market barriers work differently.
In general, unless a change is fundamental and complete, are we to
conclude that there is no change at all? How does one assess change that takes
place in degrees? Reservation of electorates for SCs and STs has led to the
presence of low-caste legislators in decision making bodies that were historically
the preserve of the upper castes. By law, untouchability has been abolished.
Some have chosen to break the traditional association between caste and
occupation. All these indicate some change. Yet, in numerous other spheres
the change is not so rapid. Social networks reflect an underlying segregation;
upper- and lower-caste inter-marriage is still rare; instances of untouchability
are reported (and several others go unreported); ghastly crimes against Dalits
continue on grounds of their caste alone. How does one characterize the whole
picture? Scovilles model does not allow us to answer this.10

Recasting economic inequality 119


Caste and patronage
Platteau (1992) attempts to tread a completely different path by exploring
caste relationships as a system of aristocratic patronage, where relations
between upper and lower castes have elements of patronage.11 He realizes and
admits that the Jajmani system cannot be equated with patronclient relationships but feels it contains such elements. An untouchables dependants
may have hereditary relationships with several members of upper castes
(several generations of a given untouchable family work for corresponding
generations of one or more upper-caste families and receive remuneration),
implying the presence of non-exclusive, non-dyadic clientilist relationships.
Contrary to the inter-linked rural market models that assume competition,
Platteaus (1992) system assumes very stable relationships, blocking the
development of competition and formalizing a stable heirarchical scheme
based on servitude and coerced labor. The instrument of patronage in the
models is the provision of land plots to the untouchable clients to ensure
compliance and docility. While social insurance to the clients does exist in
India, it could take a variety of forms other than provision of land. In view of
the antagonism and tension in upper- and lower-caste relations there exists
a very high degree of landlessness among the SCs that this model does not
treat. Platteaus paper models caste relationships as an informal system of
indentured servitude. The Jajmani system is far more complex; in addition to
land-based work, the Dalits under the traditional Jajmani system performed
jobs that were completely divorced from land such as working dead animals
(removal and leather making), lifting human feces, cremating the dead,
sweeping and so on. In terms of the spectrum of occupations that each of them
focuses on, Platteaus work is totally opposite to that of Scoville (who does not
consider land-based production at all).
Despite these serious limitations, Platteaus paper does address the link
between land ownership and caste status. This is an important facet of caste
inequality. His models suggest that radical land reform would destroy the root
of the untouchables dependence on their upper-caste landowning masters.
The long unfinished agenda of land reform in India could provide a clue to
one of the important causes of the perpetuation of caste inequality in the
rural areas.12
This still leaves open the issue of low-caste status and consequent discrimination that stems from traditional menial jobs. In Platteaus (1992) dynamic
models, the Jajmani system does not turn out to be robust in the face of a
number of changes. A weakening or even the end of Jajmani may not mean the
end of casteism. To understand this, note the continuation of inequality and
discrimination towards those seen as descendants of slaves in the USA where
slavery has been abolished for over 130 years.13
These models confirm the traditional positive association between caste
hierarchy and economic status. In contrast, in a somewhat bizarre exercise,
Rao (1992) examines compensating differentials in moving to less

120 Ashwini Deshpande


prestigious jobs. Following Dumont (1980), prestige is defined, in the
context of the occupational structure of the caste system with castes ordered
hierarchically, by considerations of ritual purity. The highest status is
accorded to castes that are considered the most pure. The hypothesis, for
which Rao (1992) says he finds support, is that if individuals valued prestige,
they would be willing to take a cut in their income to have the traditional
occupation of a caste higher ranked than their own (emphasis added).
What Rao (1992) completely fails to address is the more common case
of prestigious occupations simultaneously being the higher-paid of caste
occupations. His paper focuses on a narrow segment of occupations held by
higher-caste Indians. If his analysis were valid, then we should be able to
conclude that an untouchable would give up his high-paying menial job for a
low-paying high-caste job! The absurdity is obvious. The only context under
which the argument of the paper appears plausible would be for a shift from a
higher-paying upper-caste job such as that of a trader to an even more highcaste, say, a Brahminical occupation, that may be lower-paying. The actual
scenario may be the reverse in the tussle between prestige and monetary
gain, the latter may win easily, especially if the loss in prestige is going to be
very small. Indeed, Yadava and Chauhan (1997), in a study of Eastern Uttar
Pradesh, find that among the upper and middle castes, the shift between 1978
and 1990 has been towards business occupations (occupations traditionally
associated with Vaisyas, very much part of the high castes).
Social mobility
Are, as Rao (1992) suggests, more members of the upper castes moving into
low-caste jobs? At the time of Indias independence in 1947 there was a belief
that modern industrial development and urbanization would gradually loosen
the web of caste stratification and eventually lead to its demise.14 Have the
most deprived been able to move into the uppermost echelons of the economy? Nafziger (1975), in an investigation into caste origins of industrialists in
certain regions of South India, rejects the Horatio Alger model and finds a low
degree of both caste and class mobility. He finds overlap in feudal dominance
and prestige with capitalist control of business, and hence a continuation of
the privilege and social prestige of the high-income upper-caste families
(fitting in with the trend of low class mobility historically and internationally).
Mayoux (1993: 563, 556), in a case study of silk reeling in Karnataka a
small-scale industry, supported and promoted by the government targeting
disadvantaged groups finds limited evidence of upward mobility (though
not for the poorest of the poor) and finds structural disadvantages for those
with little capital persisting in the industry. Those at the bottom attributed
their lack of success not only to fate but also to their inability to get credit. [I]n
some cases, reluctance to lend . . . based on prejudice . . . is certainly an
element in the lower levels of lending to Scheduled Castes (Mayoux 1993:
557).The significance of this finding cannot be overemphasized. Lanjouw and

Recasting economic inequality 121


Stern (1998: 37) discuss the poor access to credit for the lowest castes (Jatabs)
in Palanpur and suggest that this may be the reason why Jatabs sometimes
lease out their land on cash rent, despite the unattractive terms of cash rent
contracts.
Chandra (1997), examining the migration patterns of the Kanbis ( a low
cultivator caste) from Gujarat to Kenya between 1911 and 1939, argues that
caste-acquired wealth abroad and the adoption of Brahminical practices upon
their return to India, meant that they could advance in the caste hierarchy
to the middle range with the new name Patidar. This could be a case
illustrating the validity of the specific process of Sanskritization or a more
general one of wealth leading to a higher-caste status.15 It challenges the
notion of the Indian society as rigid and inflexible. Jayaraman and Lanjouw
(1998: 38) report that several village studies find that the turbulence
surrounding caste relations at the middle and upper levels of the social
distribution is less marked among the lowest castes. They also raise the larger
question of whether Sanskritization should be seen as contributing to the
breakdown of the caste based patterns of behavior, or rather the opposite
(Jayaraman and Lanjouw 1998: 46).
Is discrimination an obstacle to mobility?
If successful self-employment is seen as a tall order, what about recruitment as
wage labor, where presumably the classic capitalist incentives of profit maximization would over-ride all other non-economic considerations, such as the
caste identity of the worker? Bhattacharjee (1985) tries to assess caste
discrimination, over and above institutional factors such as unequal access
to education and industrial training, and finds evidence of discrimination in
the form of unequal pay for equal work in the modern urban labor market.
It could be argued that human capital characteristics (such as education)
could explain earning differences and that discrimination against SCs begins
earlier in unequal access to education. This is the so-called pre-market
discrimination, which even the most ardent supporters of the market will
acknowledge. Dhesi and Singh (1988), in a sample study of Delhi, find
evidence pointing to differential access to education among different religion/
caste categories, as well as evidence of wage discrimination. The high
incidence of illiteracy among SCs explains a significant portion of their lower
earnings.16
Banerjee and Knight (1985) examine the crucial issue of whether labor
market discrimination takes the form of wage discrimination or job discrimination.17 They find evidence of differences in the earning functions for SCs and
non-SCs that can not be explained by characteristics and this they take as a
measure of wage discrimination. Their data also suggest that caste discrimination may be a formal sector phenomenon because of the fact that formal
sector jobs are prized jobs and hence resistance to hiring scheduled castes
is greater. They find that it is in the allocation of workers to jobs that

122 Ashwini Deshpande


discrimination is most likely to be practiced. An employer would have no
aversion to employing an untouchable provided that he worked in an
untouchables job (Banerjee and Knight 1985: 301).
Lakshmanasamy and Madheswaran (1995) examine data on technical and
scientific manpower in the four southern states of India. The paper looks at
evidence of discrimination in a sample of 67,927 workers. What they fail to
point out is the fact that the SCs were only 5.3 percent of the sample much
below their proportion in the population which indicates discriminatory
exclusion. They find a statistically significant difference in earnings between
the SCs and the others. They also suggest that the level of earnings of the SCs
may be due to the reservation policy, implying that without the reservation
policy the earnings disadvantage would be even greater.
An odd note in the paper comes in the authors uncritical acceptance of
statistical discrimination: it is possible that profit maximizing employers use
caste as a screening device for differences in productivity in the absence of
perfect information (Lakshmanasamy and Madheswaran 1995: 75). Here all
the questions that we raised about the Akerlof model become relevant. What
needs to be asked is why this imperfection of information becomes critical only
vis--vis an SC employee. What if, owing to the same imperfect information,
an upper-caste employee turns out to be less productive than expected? What
insurance do the employees seek to acquire against this risk?
Discrimination can take other forms, too. Banerjee and Bucci (1994), in an
analysis of on-the-job search after entering urban employment, find that SC
migrants displayed a greater propensity than non-SC migrants for on-the-job
search in the formal sector but not in the formal sector. This seems surprising
in view of the fact that the government policy of reserving jobs for the SCs
applies in the public sector establishments of the formal sector. But they
interpret this as evidence of discrimination, based on the results of an earnings
function analysis (in another paper) of the same sample that found that in the
formal sector, earnings were lower for the SCs. They point out that the
continuation of the search efforts shows that the SCs did not necessarily have
lower expectations and were not prepared meekly to accept their economic
lot (Banerjee and Bucci 1994: 42).
Jayaraj and Subramanian (1994) propose a number of real-valued indices of
discrimination and link them with measures of inequality. They also provide
estimates for caste-based disparity in the distribution of consumption
expenditures in rural India, based on NSS data, perhaps constitut[ing] not so
much findings, properly speaking, as a confirmation of ones worst suspicions
namely, that in the matter of caste discrimination in India, there is much
cause for disquiet (1994: 19). They find evidence of systematically inferior
status experienced by the Scheduled Castes and Tribes (1994: 14).
Thorat (1997) provides a comprehensive critique of the Hindu social order
and lays out the links between the caste system and economic inequality. His
account is affirmed by case studies (for instance, Mishra 1979; Sharma 1986;
Chaubisa 1988), casual empiricism and accounts of atrocities (Krishnan 1993;

Recasting economic inequality 123


Jain 1997) and rigorous statistical calculations. Nayak and Prasad (1984),
looking at differences in consumption levels between the SCs and STs and
others for the state of Karnataka between two points five years apart, and
Saggar and Pan (1994), analyzing consumption expenditure in four Eastern
states for one time period, find conclusive evidence of inter-caste disparity.
Even in the absence of a systematic, rigorous all-India study, this small body of
literature does suggest the presence of ongoing inter-caste disparity and
discrimination towards the lowest castes.
A brief look at the affirmative action literature
Like the bulk of the literature on the caste system in general, there is a gap
between the economic quantitative studies and the affirmative action
literature, most of which comes from sociologists and political scientists. For
instance, Pai Panandiker (1997) and Chopra (1997) make comments on the
nature of the affirmative action program in India that are thought-provoking,
but do not provide any data to help us assess the validity of their claims. Chitnis
(1997) suggests that SCs and STs . . . [are] not uniformly as backward as they
were (1997: 91). How does one establish the validity of this, if not by all-India
quantitative analysis? In fact, the Jayaraj and Subramanian (1994) study,
mentioned above, suggests that Chitnis argument may not be borne out by
the facts.
The present chapter does not attempt to summarize all aspects of the
affirmative action literature, since that debate goes beyond the mere
establishment of economic backwardness. Meerman (1999), in a study of four
hardcore minorities from different parts of the world presents evidence of
economic deprivation, but sounds a skeptical note on the question of
affirmative action. In Darity and Deshpande (2000), we discuss some evidence
regarding the persistent disparity of SCs and STs, based upon the available
evidence. Nesiah (1997) outlines the poor track record of SCST recruitment
in public employment. Galanter (1997) outlines the larger problem of
discrimination:
preferential treatment has kept the beneficiary groups and their problems
visible to the educated public, it has not stimulated widespread concern to
provide for their inclusion, apart from what is mandated by government
policy . . . [T]his lack of concern is manifest in the record of private sector
employment [where the reservation system does not apply in India].
(Galanter 1997: 191)
Galanter discusses the broader (and in a sense more crucial) question of
whether affirmative action in India has succeeded in integrating the most
marginalized groups into the mainstream or whether beneficiaries of affirmative action still face rejection in the set up to which they are admitted.
These debates are extremely contentious and complex; an in-depth critique

124 Ashwini Deshpande


requires, at the very least, another paper, if not more. The reason for
introducing this topic is to establish (yet another) rationale for economic
investigation of inter-group disparity.

Conclusion
In a country with persistent and widespread poverty such as India, the
preoccupation with research on overall poverty and disparity is natural. But as
a result of this, in the economic scholarship on Indian inequality, identification
of sources of inter-group disparity and understanding its causes, such as
prejudice and discrimination, is still in its infancy. A critical review of the
available literature suggests a prima facie case exists for considering caste as
an important ingredient of stratification. The literature review also opens up a
range of questions that can serve as the agenda for future work.

Notes
* I am grateful to Sandy Darity for inviting me to talk to his class at the University of
North Carolina (both the preparation for the lectures and the students responses
helped shape many of the ideas in this chapter) and for comments on an earlier
draft. I am also grateful to participants at the National Economic Association
Meeting, New York, January 1999, and at the Mellon seminar at the Carolina
Population Center, University of North Carolina, Chapel Hill where a preliminary version of this chapter was presented, and to the CPC library courier service
for allowing me to focus on the pleasures of reading.
1 The issue of the overlap between caste and class is complex and is not discussed
here in detail. For instance, while untouchable castes have often turned to jobs
which could be done without coming into close physical contact with caste
Hindus (Mencher 1974: 473) and thus form a large proportion of landless labor,
not all landless labourers are untouchables (as Mencher discusses). There are
issues about the growing proletarianization and the role of economic policy that
are fascinating, but are beyond the scope of this chapter.
2 This would be highly questionable, given the debate surrounding the validity of a
strict hierarchical ordering of castes (See, for instance, Dumont 1980; Gupta
1984; Chatterjee 1997; to get a flavor of the debate).
3 More than 50 million Indians belong to tribal communities which are distinct
from Hindu caste society. These are the Adivasis, who have origins which precede
the Aryans and even the Dravidians of the South. Many have lifestyles and
languages that are distinct from any of the known religions in India. At the time of
formulating the affirmative action policy, Jatis and tribes that were economically
the weakest and historically subjected to discrimination and deprivation were
identified in a government schedule as the target group of the reservation policy.
These were called the Scheduled Castes (SCs) and Scheduled Tribes (STs). The
former untouchable castes often identify themselves by the Marathi word Dalit
(meaning the oppressed), employed as a term of pride. While the SC/ST
nomenclature has grown out of government policy, Dalit is a more loosely defined
social category. I use both the words in the chapter, and the context makes their
usage clear.
4 The literature on poverty and inequality in India is vast and I make no attempt to
provide a comprehensive list. To mention a few of the important works in this

Recasting economic inequality 125

6
7

9
10

11

area: the various essays in Srinivasan and Bardhan (1974, 1988); Tendulkar (1983,
1992); Chambers (1992); Gaiha (1992); Gangopadhyay and Subramanian (1992);
Guhan (1992); Mohan and Thottan (1992); Vaidyanathan (1992).
Jayaraman and Lanjouw (1998), Lanjouw and Stern (1998) and World Bank
(1998) are some of the mild exceptions to this rule. While the focus of these works
continues to be on poverty in general, the former two intersperse their analysis
with a discussion of changes in the traditional caste hierarchy in the context of
economic development in Palanpur, India. The latter notes the role of caste in
discussing the poverty of SCs and STs under the head who is the poor (1998: 5).
Both the Chicago school (Becker) and the economics of rural organization
(Akerlof) have been criticized for an excessive focus on questions of efficiency at
the expense of distribution. See Hoff et al. (1993) for a more detailed discussion.
An objection to this from a sociological perspective could be that the contemporary meaning of belonging to a caste is not clear for instance, to what extent
does caste affiliation determine the behavior of its members? Or, what exactly is
the contemporary nature of sanctions do they apply only to marriage or to other
social behaviors? All these questions are important but outside the purview of
economic enquiry.
Lals argument (1988: 72) is that given a set of problems that the ancient Indians
were facing, such as political instability, the need for a secure labor supply for labor
intensive settled agriculture in the Indo-Gangetic plains, uncertainty concerning
outputs and so forth, the caste system was a second best optimal response. An
analysis of this argument necessitates forays into ancient history that are well
beyond the brief of this chapter.
The traditional caste divisions implied a hereditary work allocation, where the
specified arrangement of the flow of goods and services between the individuals in
the system was called the Jajmani System.
Lanjouw and Stern (1998) report on perceptions of change in Palanpur, where
people they talked to felt that caste-based distinctions had become less important
in recent decades (1998: 212). Such perceptions would find no place in the
Scoville model.
Platteau argues that patronage relationships display four main characteristics,
which very briefly can be stated as follows:
a
b
c
d

they are highly asymmetrical;


contain a strong element of affection;
are comparatively stable;
involve multiple facets of the actors concerned and imply a set of reciprocal
obligations which stretches over a wide and loosely defined domain, including
some degree of social security to the client, which could be important to poor
villagers deprived of significant access to land.

The rationale of patronage from the point of view of the patron is made explicit
later basically he is assured of a pool of readily available trustworthy and
compliant labor for agricultural tasks and for ritual, social and political activities
or duties.
12 Struggles for greater equality in land holdings were a part of the independence
movement and their strength varied across regions. Land reform after independence has been under the purview of state governments, thus depending entirely
on the political will of a given state government. These two factors together
contributed to the lopsided nature of land reforms. This is discussed in some
detail in Deshpande (2001a).
13 For a comprehensive examination of the economic consequences of contemporary racism in the USA, see Darity and Myers (1998).
14 Parallel claims have been made by Brazilian scholars about the impact of

126 Ashwini Deshpande


industrialization on racial attitudes in their country. For a discussion of some of
the theories and the dissonance between theory and data, see Lovell (1994).
15 This term is due to Srinivas (1962), who believed that Sanskritization is both a
part of the process of social mobility as well as the idiom in which mobility
expresses itself . . . can also occur independently of the acquisition of political and
economic power (1962: 9). This is how he describes the process: A low caste was
able, in a generation or two, to rise to a higher position in the hierarchy by adopting vegetarianism and teetotalism, and by Sanskritizing its ritual and pantheon.
In short, it took over, as far as possible, the customs, rites, and beliefs of the
Brahmins, and the adoption of the Brahminic way of life by a low caste seems to
have been frequent, although theoretically forbidden (1962: 42).
16 The main results of the Dhesi and Singh (1988) paper are summarized in Dhesi
(1996).
17 Wage discrimination is defined as unequal pay for workers with the same economic characteristics even within the same job and job discrimination is defined
as unequal pay for workers with the same economic characteristics which results
from their being employed in different jobs (Banerjee and Knight 1985: 278).

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The mobility of Japans Burakumin


Militant advocacy and government
response
Jacob Meerman

Not alien, just profoundly alienated.


(Loury 1997: 154)

Introduction
Japans Burakumin are a low-status minority of 2 or 3 million out of a total
population of 130 million. They remain near the bottom of Japans class
structure, although they are identical genetically and culturally (same
language, religion, and customs) with other Japanese. Centuries ago, they
originated as eta, those occupied in polluting occupations (animal slaughter,
leather work, disposal of the dead) and hinin, social deviants such as vagrants,
unemployables, but also impoverished peasants who had threatened the
authorities (Donoghue 1978: 278; Hirasawa 1989: 31). By and large only
the memory of these groups remains, but the Burakumin still live in areas
that only yesterday were segregated and decrepit ghettos, and still work in
low-skill, blue-collar occupations. Long-standing discrimination by Japans
majority explains their continuing existence as a low-status, low-income
group. Since the 1970s, partly because of the militant advocacy of the Buraku
Liberation League (BLL), an organization of and for the Burakumin, Japans
governments invested the equivalent of tens of billion of dollars in ghetto
rehabilitation and education. This big push dramatically reduced the gap in
socio-economic status between mainline Japanese and the Buraku minority,
although the latter are still far from parity with the majority. (In this chapter,
Buraku means of the Burakumin, and the uncapitalized, buraku means
those village(s) that had once been the exclusive residence of the Burakumin.
Burakumin is a euphemism that literally means village (buraku) people
(min).)1
Buraku mobility history is instructive for three reasons: the unusual manner
in which the BLL has induced the government to promote Buraku liberation; the extraordinary manner in which the government has responded; and
the question of the degree to which the Burkau minority is integrating into the
larger society. The condensed account that follows concentrates on these
three themes.2

The mobility of Japans Burakumin 131

Buraku history
The institutionalization of the Buraku minority as polluted, endogamous,
ghettoized, and exploited took place during the period of Tokugawa
dominion (16031867). To promote social stability, the Tokugawa formalized
Japans class structure into four quasi-castes: samurai, farmers, artisans, and
finally merchants. Birth determined to which group one belonged. The
Shogunate also undertook to regulate the morals of the people and to
prescribe their behaviour in the minutest detail (Samson 1950: 192). The
status and required behavior of the non-class, the outcast remainder, todays
Burakumin, was also defined.
The Tokugawa segregated and regulated Buraku families in their buraku
(i.e. villages, although today many are in urban areas) frequently in
undesirable areas, e.g. on steep hillsides, river flood plains and other waste
lands. Many maps deliberately omitted these settlements, although the
authorities recorded the address of each buraku and the vital statistics of their
inhabitants on an individual basis (as they did for all other citizens). Marriage
was permitted only within the group. Over time, Tokugawan sumptuary
regulation of Buraku dress and behavior became ever more humiliating. In
some periods they were required to wear distinctive clothing such as blue
collars; or were forced to keep their hair cut short. At times, their heads had to
remain uncovered in all weather and women were not allowed to shave their
eyebrows or blacken their teeth (Japan, An Illustrated Encyclopedia 1993: 535).
By the eighteenth century they were prohibited from entering public places
including shrines and temples or even the homes of common citizens. They
were not permitted to attend school.
Access to occupations was also regulated, although permitted occupations
varied regionally, and over time. The de facto Buraku (i.e. the eta) monopoly
of butchery, tanning and leather-work was formalized. Other occupations
included roadwork, stonecutting, bamboo manufactures, subsistence farming,
sweeping, fish-mongering, night-soil and garbage disposal, cremation and
burial (Meerman 2002a). During the Tokugawa period, many desperate,
nearly starving, rural people were dispossessed of their land (frequently for
inability to pay taxes, or for revolting against their lords). These new Burakumin (or hinin) fled to towns in an attempt to earn a living, or in extremis, to
beg, although even begging might be limited by local authorities (Groemer
2001: 263ff). During the nineteenth century Buraku children and adolescents
commonly worked in factories or as baby-sitters and house servants for the
better off (Hirasawa 1989: 47). Some Buraku residents were forced to operate
leper or prison hospitals deliberately located within the buraku.
The myths of the Burakumin as unclean, genetically inferior, and even as
non-Japanese developed around the historical role of Japans leather workers
(kawata, or pejoratively and less precisely, eta). The introduction and spread
of Buddhism in Japan, prior to the first millennium, led to condemnation
of meat eating and to the activities associated with it. Later the Shinto

132 Jacob Meerman


association of pollution with death was linked with the Buddhist prohibition
against killing animals. Hence, butchery, tanning, and leather work were
condemned as polluting, and this defilement was considered contagious
(Japan, An Illustrated Encyclopedia 1993: 146). The eta, the filthy lot, who
practiced such occupations were isolated from the rest of society and
condemned as morally, and intellectually tainted. Some of todays Buraku
minority trace their origins to villages of such leather workers.
During Tokugawa rule, the buraku also absorbed a wide range and large
number of social deviants These new buraku residents, or hinin (nonpeople, therefore animal) were usually forced into Buraku occupations and
became tarred with the same brush: in the minds of the majority, those forced
to live in burakus were blemished and contaminated. The authorities also
encouraged many of the hinin to settle new ghettos and these also became
burakuof the polluted and impure (Kitaguchi 1999: 78 ff; Groemer 2001:
274). Today the working definition of a member of the Burakumin is whether
one lives in a buraku, or is descended from a Buraku family. Because the influx
of new blood during the Tokugawa was so large, relative to the traditional
leather workers, few Burakumin today have any significant genetic connection
with the medieval leather workers.
The Tokugawa quarantine of the unfit also ensured that the Buraku
population increased rapidly. The conversion of class to quasi-caste eliminated most upward social mobility including that of the leather workers, or
those of hinin origin. By the last century of Tokugawa rule, it was very difficult
for a Buraku resident to regain the status of a common citizen. Hence the
influx of hinin, plus the natural increase in the established buraku, led to a
large increase in the number of Buraku people. Overall, the Buraku population may have increased threefold from 1720 to the mid-nineteenth century,
a period when Japans total population stagnated (Neary 1997: 54).
The Tokugawa also assured the economic livelihood of the kawata Burakumin by supporting their leatherwork as an essential war industry,
producing saddles, harnesses, bowstrings, leather-shields, and drums. (The
Shogunates prohibited the use of firearms throughout Japan until their
demise in the late nineteenth century!) Burakumin (both eta and hinin) also
performed many other roles in support of the regime. They were occasionally
used as militia to put down peasant revolts. Some became jailers, judicial
torturers, and executioners. They were generally charged with disposing of the
bodies of those executed. Some acted as government look-outs on roads
or as gatekeepers who controlled entrance to towns (Acitelli-Donoghue
1978: 29).
So, the Tokugawa re-designed the Burakumin as a means to maintaining
power and, in the process, deliberately exacerbated prejudice and intolerance
(Taira 1970; Groemer 2001). To this end they fostered the myth of Buraku
impurity and blemished faculties. Because these defects were believed to be
hereditary, it was necessary to isolate the Burakumin from society. They also
used their creation in a police and military capacity (Neary 1989: Chapter 1).

The mobility of Japans Burakumin 133


The resulting association of the Burakumin with violent and vile duties
increased the commoners fear and contempt of them. Today, much of the
antipathy of mainline Japanese to the Burakumin has its roots in Tokugawa
policy. Indeed, Of all those special measurers which were created to help
maintain the power base of the Tokugawa Shogunate, anti-Buraku discrimination is the only one which remains today (Kitaguchi 1999: 133).
In 1871, after deposing the shogunate, the Imperial Meiji Government
issued the Emancipation Edict that ended outcaste status and converted the
Burakumin to new common citizens. Occasionally described as a paper
emancipation, the political decree had little beneficial impact for the Buraku
population. On the contrary, farmers (humiliated because the Burakumin now
had equal legal status) undertook a series of pogroms aimed at exterminating
the new commoners in 18723 and village governments moved to exclude
them from all access to held in common village land (Upham 1987: 80).
Emancipation also ended the Burakumin monopoly on certain occupations
(Donoghue 1978: 33); for example, Buraku shoe production soon proved
unable to compete with newly introduced mass-production technology.
In the ensuing decades progress to socio-economic parity with the majority
was slow. De jure legal equality did little to overcome the many disadvantages
of Buraku life and less to overcome the widespread discrimination against
them. Although by 1912 many Buraku children attended primary schools,
usually segregated, they rarely advanced beyond the primary level. Even in
integrated schools, Burakumin were seated apart from other children at the
back or side of the classroom. Play groups, eating utensils and toilets were
usually kept separate (Neary 1989: 3). During the Meiji Period, Buraku
leaders pursued a policy of reconciliation that stressed formal petitions for
governmental relief, but little relief was forthcoming.
By the 1920s, militant, young Buraku organizers, much influenced by
Marxism and by Christian doctrines, had founded Shuheisha (the Levelers
Society) to promote Buraku liberation. From its very beginning the new
organization pursued a policy of confrontation of those responsible for
discriminatory actions by condemning such actions and demanding apologies.
In some cases the discriminators were pushed into measures to redress the
discriminatory act, e.g. removal of the guilty person(s) from authority.
Protested actions covered a wide range, although many involved no more than
discriminatory speech. The chief character of these early denunciations was
their spontaneity and anger and many actions ended in injury or destruction
of property, or in fights with rightist groups. By the 1930s, Suheisha had gained
widespread respect within the Buraku community and was planning
campaigns with a view to maximum political impact (Upham 1987: 815). In
1937, however, Japans expansionist and militarist government simply closed
down Suheisha as destructive of national unity.
Following the Pacific War, Suiheisha re-emerged in 1947 as the National
Committee for Buraku Liberation with strong backing from Japans Communist and Socialist political parties. In 1955, the Committee became the

134 Jacob Meerman


Buraku Liberation League (BLL) and undertook a series of mass demonstrations and protests that increased public recognition of Buraku claims and
sympathy for their plight. As a consequence, during the 1960s, many Japanese,
perhaps a majority, became aware of the shocking physical environment of the
Buraku ghettos, the poor education of Buraku youth and the Buraku pattern
of employment, with its preponderance of low-paid day-laborers, cottage
industries, and high unemployment. In 1969, the national government had
established a nation-wide program of Buraku reconstruction and education by
means of the Special Measures Laws. By then the BLL had over 2,000
branches and close to 200,000 members.

Economic and social status


Economic and social data concerning the Buraku population are misleading,
for three reasons. First, government Buraku statistics are based on surveys of
the Burakumin residents of only those buraku classified as dowa [integration]
districts,3 i.e. the 4,603 buraku that participated in the programs providing
benefits under the Special Measures Laws. This dowa-district universe (also
translated from the Japanese as dowa areas) excludes about one-eighth of the
approximately 5,300 burakus identified by the government in the 1935 count
(Su-Lan Reber 1999: n. 82). Second, currently less than half the population in
the dowa districts is classified as Burakumin in government surveys. Within
each district, the BLL and local authorities, and occasionally local political
parties, have certified who is Burakumin and therefore eligible to receive
targeted government benefits. The error rate in assigning Burakumin identity
is unknown (Upham 1987: 113).4 Third, the estimates necessarily exclude the
bona fide Burakumin that have emigrated from the burakus. In Tables 8.1
8.4, the universe of Burakumin is defined as those residents in the burakus
included in the dowa districts at the time of the survey that were certified as
eligible to receive benefits under the special benefit legislation. A caveat,
therefore, is needed in working with the statistics in the following tables: they
apply, with some error, only to the Burakumin in the buraku, and exclude the
Burakumin who no longer live in buraku. (Important implications of this
shortcoming are taken up in the final section of the chapter.) Table 8.1 shows
the large lag in Burakumin tertiary education compared to the entire population in 1976.
In Table 8.2 the high rate of welfare payments suggests persistence of
Table 8.1 Educational achievement, Buraku population and all-Japan, 1976

% completed College
% attending prestigious Universities

Buraku population

All-Japan

3.4
3

13.7
21

Sources: Kirasawa (1989: 12, 13), except row 2 which is from Clear (1991: 87), original Japanese
sources are listed in both dissertations.

The mobility of Japans Burakumin 135


Table 8.2 Selected survey results, Burakumin compared to total population, 1993
(percent)

Receive welfare payments (livelihood security support)a


Own their own homes
Long-term absentees from Junior High School
Cohort entry into Senior High School

Burakub

All-Japan

52
63
5
92

7
60
2
96

Sources: Japan Government Somucho (1995), Surveys to Assess Conditions in the Dowa
Districts, 131.
The above data are cited by Neary (1997: 701).
Notes
a In 1979, 76 percent of the Burakumin received livelihood security support.
b Burakumin in this table refers solely to Burakumin living in buraku classified as dowa
areas.

Table 8.3 Highest level of education attained by Dowa-district Burakumin (1993)


and total population (1990) (percent)

Primary School certification


Secondary School certification
Higher education certification
(Of which University graduation)
Non-attendance and drops-outs at primary level

Burakumin,
1993

National Census,
1990

55
32
8
(3)
4

32
45
21
(12)
0.2

Source: Somucho,1995, Actual Situation of Life Survey, 72.


Note
Data apply only to those who have completed their education.

Table 8.4 Highest education attained by Dowa-district Burakumin (1993) and


all-Japan (1990), by age groups (percent)
Age
(years)

Completed
elementary
only
Burakumin

Completed
elementary
only
all-Japan

Completed
secondary
only
Burakumin

Completed Completed Completed


secondary advanced advanced
only
all-Japan Burakumin all-Japan

6064
5054
4044
3034
2024
Total

80.3
73.0
45.6
17.5
16.5
55

49.0
39.5
22.1
8.2
8.7
32

12.5
20.4
43.9
60.4
63.8
32

38.8
45.3
49.2
49.1
58.1
45

1.5
2.0
8.5
19.8
17.3
8

10.4
13.3
23.2
41.1
31.0
21

Source: Kyo no Buraku Sabetsu, Kaiho Shuppan (1996), as derived from McLauchlan (1999:
1415).

136 Jacob Meerman


poverty for many Burakumin. Table 8.3 indicates that the dowa-district Burakumin today continue to lag behind the general population in educational
attainment. It understates the gap in educational attainment because at all
levels, Buraku students attend schools of poorer quality than mainliners.
Table 8.3s indication of the educational gap of the Buraku population is also
misleading because educational attainment varies inversely with age, particularly with respect to the Burakumin. Table 8.4 eliminates this by providing
data by age cohorts.
Table 8.4 shows that for those in the age group 6064, 14 percent completed
secondary school, while the all-Japan total was 49 percent, a gap of 35
percentage points. For the most recent graduates, the age group 2024, the
data show that 81 percent of the Buraku minority completed secondary school,
compared to an all-Japan total of 89 percent, an 8 percentage point gap. So
through the secondary level the reduction in educational disparity has been
dramatic. At the tertiary level the data are ambiguous. There has been an
enormous expansion in the number of Buraku persons who have completed
advanced education. Yet measured in percentage points, the gap between
majority and Burakumin has increased from 9 percentage points for those in
the 6064 age cohort to 14 points for those in the 2024 age cohort. Moreover,
compared to the majority, very few Burakumin have graduated from a
university (see Table 8.3) or other high-prestige institution while they are
over-enrolled in the equivalent of American junior colleges. At the
secondary level, too, Burakumin attended poorer quality schools.
Review of the occupational and employment profiles of the Buraku
population compared to those of the majority also indicates continued intergroup disparity. At the national level, Buraku populations have lower labor
force participation rates than the majority, partly owing to higher rates of
disability particularly among older workers, often the consequence of a
childhood of poor nutrition and years of very hard labor. But even those in the
labor force have a lower rate of employment than the majority. Most Buraku
employees work in small and medium-size companies as blue-collar workers,
frequently as temporary workers or day-laborers (Tomonaga 1993: 12). Few
have ever had employment as permanent staff of the large modern
corporations that pay the highest wages and offer life-time employment. A
review of the occupational distribution of Buraku employees from an Osaka
buraku (that has developed into a urban neighborhood) illustrates these
findings. About one-third are low-wage, blue-collar government employees,
e.g. janitors and cafeteria staff, water supply workers and railroad hands.
Another third work in small companies (defined as having less than 30
workers) where employment fluctuates substantially. Many of the last third
are self-employed, e.g. engaged in buying used materials for recycling or in
labor-intensive, small-scale construction. (Su-Lan Reber 1999: 323).
Consistent with this labor force account, estimates of comparative incomes
since 1970 invariably conclude that mean Buraku incomes are 60 to 70 percent
of those of the majority.5

The mobility of Japans Burakumin 137

Discrimination against Burakumin


On-going and past discrimination explains the lag of the Buraku population in
income and status behind the Japanese majority. But statistical inference that
attempts to gauge the degree to which current discrimination (above all in
labor markets and education) causes the lag does not exist. This section
therefore describes the basic kinds of discrimination and indicates their
impact. A few historical illustrations provide a perspective on the virulence of
anti-Buraku discrimination:

In 1880, the Ministry of Justice, in its Handbook of Japanese Customs and


Folkways, described the Burakumin as the lowliest of people, resembling
animals.
In 1922, in Beppu, Oita Prefecture, the local police had a buraku burned
down because of its proximity to the railroad line. Destruction was
deemed necessary since part of the slum would have been visible from the
Crown Princes Train as it passed through the town of Beppu. Prefectural
authorities asserted that demolition was necessary because the buraku
was a health hazard, and home to criminals and drifters (Neary 1989: 87).
In 1933, the District Court of Takamatsu ruled that a Burakumin had
committed a crime in marrying without disclosing his origins to his spouse
(Su-Lan Reber 1999: 305).
During the Pacific War, Buraku servicemen consistently received the
lowest-status assignments.
In the 1980s, the BLL documented many graffiti. They included Kill
Burakumin, Buraku people are human garbage on a bridge pillar in
Osaka; a pamphlet that circulated at Osakas University of Fine Arts
declaring inter alia, to protect the natural superiority of all decent
Japanese citizens . . . no possible concession must be made towards eta
filth; in an Osaka primary school the graffiti was: To the eta staff at this
School. We wont eat anything you have made . . . go and cook the dregs of
hell . . . maggots (Kitaguchi 1999: 1424).
In the 1990s electronic media were used to circulate discriminatory
documents to recipients of electronic mail or on web pages (Tomonaga
1998: 25).

A key instrument in Buraku discrimination is the background investigation


of genealogy and socio-economic status used to ferret out Buraku identity. Its
use is most clearly documented with respect to marriage and employment
decisions. Examination of family background to determine whether the
candidate is of sound lineage and adequate status is common in Japanese
marriage decisions. It is also a good way to avoid marriage with Burakumin.
Employment discrimination is a most serious obstacle in the efforts of
Burakumin to achieve parity with the majority. In taking employment
decisions, Japans large modern corporations are particularly concerned that

138 Jacob Meerman


those invited to join the company family will fit in harmoniously with other
employees (Upham 1980: 667). Formerly, many companies explicitly stated
that they will not hire Burakumin (Japan, An Illustrated Encyclopedia 1993:
146). Hence, the family history of candidates for employment is likely to be
closely examined particularly with respect to the Buraku connection.
Universities also have rejected Buraku applicants on the basis of family history
(Upham 1993: 327).
Numerous detective agencies conduct such background investigations,
relying on at least nine different Burakumin lists that provide the addresses of
present and former Buraku ghettos.6 Over 200 corporations in Japan,
including most of Japans largest and most modern firms have purchased these
lists and have used them to exclude job applicants of buraku origin, whether or
not they belonged to the Burakumin minority. The use and sale of such chimei
sokan (comprehensive guides to place names) is now illegal, although they still
have a large sub rosa circulation. Investigators have also relied on the registrations of births and deaths by family (koseki), with their addresses in
municipality offices. These provide information on the place of birth,
parentage, and current residence of all individuals born in Japan.7 Until 1976
the koseki were open to the public. Today, would-be viewers or those
requesting an abstract must explain the reason for the request, which the
municipal authority may refuse. Nevertheless these restrictions are frequently
ignored and discrimination based on koseki records remains common. During
Tokugawa rule, Buddhist temples (which also own and manage associated
cemeteries) were required to record vital statistics on their members, both
alive and deceased. Most continue the practice and may provide the
information to investigators (Japan, An Illustrated Encyclopedia 1993: 147;
Su-Lan Reber 1999: 312, 358)
In the buraku hunts, the acid test of Burakumin identity is evidence of
having lived in a buraku or of being descended from families who were buraku
residents. Buraku residence has been the only outward sign of the contaminated bloodline of the individual Burakumin that supposedly arose in the
feudal past of the hereditary eta caste. This belief persists despite overwhelming evidence that most individuals with a current or genealogical history of
buraku residence have no connection with the leather workers of the
Tokugawa or earlier periods (Kitaguchi 1999: 81).8
Buraku discrimination persists notwithstanding Constitutional guarantees.
Japans Constitution prohibits discrimination based on race, creed, sex, social
status or family origin (Article 14), guarantees the free choice of occupation
(Article 22), of marriage (Article 24), right to work (Article 27), and access
to education correspondent to each persons ability (Article 26). (Upham
1987: 105).
Nevertheless, discrimination in labor markets is de facto legal. Japan
never has had legislation that made discrimination against individuals or
groups in the labor market or school admissions a punishable offense9 (Upham
1993: 327). During the late 1970s, as the BLL pressed for prohibition of the

The mobility of Japans Burakumin 139


lists used to identify individual Burakumin, the question of the need for
specific legislation prohibiting employment discrimination came to the fore.
The Minister of Justice stated that discrimination was a matter of the heart
and not suitable for legal attention (Upham 1987: 117). A frequent response
to the demand that firms not discriminate against Buraku and other minorities
(Koreans, returnees of Japanese origin from China and other countries) is
that this would interfere with their right to select employees and would have an
injurious impact on firm operations.

The response of the Buraku Liberation League


Both governmental authorities and the BLL emphasize the need to change
mainline beliefs and attitudes about the Buraku minority, rather than to
attempt to legislate behavior. The BLL has contended that prejudice
against the Buraku minority and the irrationality and superstition that give
rise to it are so pervasive among all classes in Japan that enforceable
legislation against Buraku discrimination has not been feasible. Instead, the
BLL has relied on self-help. Publications and conferences are part of the
repertoire, but the League has also organized protests, street demonstrations
and picketing by members for many reasons, including targeting discriminators, e.g. schools, teachers, firms, and publishing houses that print
distortions and discriminatory phrases in books or magazines (Far East
Economic Review 1992: 289).
However kyudan toso (denunciation struggle) has long been the Leagues
most effective tactic (Upham 1987: 97). In the words of Ian Neary, kyudan toso
is to the BLL what the strike has been to the labor union. Denunciation
involves confrontation and judgment against the institutional or individual
perpetrator of discrimination, generally followed by the discriminators
apology and plan of remedial actions. In the event of presumptive discrimination (discriminatory language, discrimination in the workplace or school,
breaking off a marriage engagement, publication of a controversial analysis of
a Buraku issue, use of Buraku lists) the BLL may initiate a denunciation
procedure that starts with a session designed to reach agreement between the
BLL and the accused on the nature and content of the incident. The BLL
usually finds that wrong has been done and the denunciation session
follows. At both sessions the discriminators and their supervising authorities
(if any) will be present. An incident involving a school teacher will require the
presence of the teacher, his/her supervisors, but may also involve a representative from a higher level of government. In the denunciation campaign the
target may not be so much the offender as the institutions seen as responsible
for the offenders behavior.
Sessions take place in rooms or even halls in which the alleged discriminator
and BLL face each other. The number of League participants typically exceeds
that of the defendants. The responsible parties rarely justify their actions
but are apologetic and deferential to the BLL. League speakers energetically

140 Jacob Meerman


interrogate those considered responsible, directly or indirectly, for the
discriminatory action. Usually the latter agree to rectify their behavior, stress
their determination not to repeat it, and indicate measures that will be taken
to avoid poor behavior in the future. Confession, self-criticism and resolution
to do better in the future are the essential elements. The session may well end
with an expression of thanks by the defendants to the BLL officials for having
shown them the error of their ways (Otake 1997: 181ff).
The foregoing gives a stylized version of kyudan, at least as it was practiced
before the 1990s. During the 1970s and 1980s, kyudan was usually menacing
and extremely humiliating for the defendants. Rohlens description conveys
these aspects well:
Suspected persons . . . are surrounded by League members and
sympathizers and subjected to accusations and questioning, usually in
very insulting language. The purpose is to shock and anger people so
deeply that at last their eyes are opened to the reality of their racist
thinking. Confrontations can last for hours and are often repeated over
many weeks. The person surrounded almost inevitably breaks down under
the pressure and yields to the insistent accusations and demands of those
confronting him. At times the initial shock treatment includes dancing
and chanting around the person, a technique known as Indian style
confrontation; however the intensity of the assault varies greatly with the
people involved and with the degree of resistance given. Some people
following the trauma of thus being confronted, say it was a deeply moving
and worthwhile experience, similar to a religious conversion, but others
despise the technique [since it ] assumes the individuals guilt and leaves
no room for self-defense. The Communist party calls it a kangaroo
court and a violent assault on individual rights. Clearly it can shatter a
person and suicides have occasionally resulted from such treatment,
especially when the confrontations are extended to relatives of officials.
On the other hand, the Leagues assertion that discrimination will not end
short of such shock treatment also seems reasonable.
(Rohlen 1976: 692)
One, presumably atypical denunciation, and possibly the most extreme in
the entire history of kyudan toso, went well beyond this description. In 1974, at
Yoka High School in rural Hyogo Prefecture, 52 teachers were confined to
school premises by supporters of the League to persuade them to start a
Buraku study club at the school in cooperation with the League. The teachers
were humiliated, intimidated and finally beaten during the 12 hours of their
detention; 43 were hospitalized with broken bones and other serious injuries;
13 remained in hospital from 36 weeks (Rohlen 1976: 9829).
Denunciation sessions have been used as the principal tactic in elaborate
campaigns covering entire regions, including efforts to enhance access to
educational opportunities, improve infrastructure in Buraku settlements, and
denounce those responsible for the Buraku blacklists (an undertaking that

The mobility of Japans Burakumin 141


continued for 10 years). In 1975, the League launched a major denunciation
campaign for equal employment opportunity (Upham 1987: 107). Fear of
denunciation sessions and other actions have made public discussion of
Buraku issues close to taboo in Japan. For the same reasons, within Japan,
non-partisan research on the Burakumin has been constrained. Japans mass
media avoid the issue as much as possible (Masayuki, 1991: 284). Discrimination in word and deed has long gone underground.10 Consequently since the
early 1980s documentation of discrimination is rare.
Moreover, systematic measures of the scale and impact of denunciation
actions are not documented. Although denunciation is often initially directed
at individuals and associated institutions, such as schools or firms, it has
probably been most effective when directed at government to force action on
specific problems. Perhaps it has been most successful in helping to induce the
government to undertake a vast program of rehabilitation of Buraku ghettos
and of promotion of Buraku education with the introduction of the Special
Measures Laws discussed in the following section.
The failure of the national government to challenge kyudan toso suggests
that Japans powerful national bureaucracy and other authorities accept it.
Indeed, by the 1980s the judiciary had explicitly legitimized denunciation.
There have been very few occasions (one of these was the successful suit for
personal injuries filed on behalf of the Yoka high-school teachers) when
subjects of BLL denunciations have filed a criminal complaint, despite
obvious violations of the criminal code.11 During such suits the judiciary has
accepted the BLL argument that denunciation is legal. In the Yata Middle
School Case (1975)12 the Osaka District Court concluded that its justifiable
for society to accept the process called denunciation against discrimination as
long as the methods and tactics dont exceed reasonable limits. In ruling on
the appeal of this decision in 1981, the Osaka High Court affirmed the
existence of an abstract right of denunciation as claimed by the BLL during
its defense but also set limits in stating that denunciation is cruel and soon
becomes a form of private punishment that can not receive the full approval of
the law (Upham 1987: 968, 101; Neary 1997: 68). The BLL responded by
asserting that Charges that denunciation is intimidation are countered by the
assertion that discrimination is intimidation, denunciation only its answer
and because the most fundamental human rights are invaded, denunciation is
only a form of self-defense (Upham 1987: 108).
The Leagues denunciation tactics have become less aggressive since 1990,
perhaps because of belief that old-fashioned kyudan toso has serious shortcomings and reduced public support. In the 1990s the League worked with
international human rights groups and stressed international human rights
declarations and treaties to which Japan has subscribed to structure the
ongoing struggle. Moving the discussion into the international human rights
arena may partly be due to the Leagues conviction that legislation specifically
prohibiting and punishing the various forms of discrimination commonly used
against the Burakumin is highly unlikely (Buraku Liberation News, passim, in
editions appearing since 1990).

142 Jacob Meerman

Government programs to reduce discrimination


In 1961 the central government created a council to study the Buraku situation
and to develop an anti-discrimination policy. The councils report, completed
in 1965, stressed that the Burakumin were identical to other Japanese, and
that their origins had in no way tainted or polluted them. The report saw
Buraku condemnation and discrimination as deeply ingrained in majority
thinking, and as an expression of irrational and superstitious beliefs. The
accompanying survey of burakus described ghetto-like communities located
on land liable to flooding . . . with poor housing . . . often lacking in such public
services as sewers, tap water, streetlights and fire protection. The shortfall in
education was highlighted. It concluded that the deplorable state of the
burakus had to be eliminated and that a large program of education needed to
be undertaken (Neary 1997: 63). Moreover it was the states duty to resolve
the problem fundamentally and promptly, and an enabling statute was
needed to encourage governments to legislate special measures for the
Buraku problem (Upham 1987: 856).
In 1969, the Diet passed the first Special Measures Law (SML) for
Assimilation (Dowa) Projects. It was succeeded by similar legislation in 1982,
and by a third law in 1987 that expired in 2002. The SML financed three kinds
of expenditure: capital outlays to improve buraku infrastructure; financial
grants for Buraku families; and educational outlays.
Prefectural and local governments carried out SML projects as agents of
the state, i.e. the national government, but bore most of the financial costs. 13
Usually the state was to pay two-thirds or even a larger share, since Buraku
discrimination was a primary responsibility of the nation as a whole. Rarely
did the state keep its part of the bargain. Nor has it intervened in project
implementation, nor taken part in the bitter political fights (frequently
between the Communist Party and the BLL) that ensued over allocation of
funds and distribution of benefits among the Buraku population (Upham
1980: 48; Upham1987: 86; Neary 1997: 615).
Upham provides an excellent description of the programs, as they existed at
about 1979:
Streets are paved and widened; sewage and water systems are installed;
public facilities such as schools, clinics and government offices are built;
settlement houses, homes for the elderly and community centers are built
and turned over to the B.L.L. to manage; and perhaps most important to
the residents, a large amount of high-rise public housing is constructed.
These programs are essentially urban renewal but with no attempt to
change the demographic character of the neighborhood. It remains a
Burakumin neighborhood and relatively poor although some of the public
facilities are new and there may be marginally more open space . . .
A second component of most programs consists of financial grants paid
directly to Buraku families . . . The Osaka City program, although more
generous than most, can serve as an example . . . When a Burakumin

The mobility of Japans Burakumin 143


marries, he or she receives 75,000. The birth of a child brings another
215,000, with the cost of milk subsidized during nursing. There is an
elaborate and generous program of grants rewarding school attendance.
From entry into day care through university, Buraku children receive
annual grants plus an additional bonus at entry into elementary, middle,
and high schools and university . . . School expenses are also covered.
Those enrolled in vocational training receive similar treatment.
Osaka and other local governments offer other programs not listed. A
family with two children for example could easily receive more than
400,000 annually in Osaka, probably somewhat less in most other areas.
This figure does not include indirect benefits such as subsidized rents . . .
easy access to state-subsidized day-care and the convenient availability of
public recreational and community facilities . . .
The school programs . . . are two-fold. First schools in areas are more
heavily staffed with smaller classes and extra tutoring for Buraku
students. Second all schools both within and without the ghetto have
instructional programs to explain the origin of Burakumin, the problem of
discrimination, and the responsibility of the society under the new
constitution to eliminate it. Posters criticizing discrimination . . . are
placed in buses, subways and public offices. Speeches are given to unions,
schools, neighborhood associations etc. by public employees specifically
trained to present the correct view of the Buraku problem. The emphasis
though is on the evil of discrimination and the democratic ideals of the
constitution. The content is heavily moralistic and didactic, in many ways
reminiscent of moral campaigns in Taiwan or China.
(Upham 1980: 389)
Additional aspects of educational support are noteworthy. In the 1970s and
1980s, many teachers made special efforts on behalf of the Burakumin. These
included visits to the homes of Buraku pupils and development of measures
to provide financial assistance to cover the costs of school supplies and
uniforms.14 In some school systems, welfare teachers were employed on a
full-time basis inter alia to encourage Buraku parents to send truant children
back to school (Hirasawa 1989: 44, 659). Many of the welfare teachers
served the bridging function between Buraku communities and schools. They
conducted seminars to improve teachers recognition of Buraku discrimination problems. They suggested reforms in school curricula and activities to
welcome absentee students to school (1989: 69). During the 1970s, the
newly constructed Buraku community centers were often the scene of supplementary schooling and adult literacy classes.15 A few Buraku children up to the
third grade participate in supplementary academic classes provided at the
centers; in the past such classes were often run by volunteer teachers of Buraku
origins. They frequently emphasized the most difficult Japanese-language
arts, such as use of kanji (Chinese characters), a competence that is of crucial
importance in gaining admission to higher education (Clear 1991: 98ff).
Since 1980, most of the cash subsidies of the SML have ceased. Some of

144 Jacob Meerman


those that provided an incentive for higher school attendance now take the
form of loans. One Buraku innovation has become universal: free textbooks in
the public schools are now the nation-wide norm. In the early 1990s, according
to BLL estimates, less than 1 percent of finance [provided under the SML] is
used for educational purposes (Buraku Kaiho Shimbun, July 1997, as
reported in Kitaguchi 1999: 8). The rent subsidies have continued and there
are also important implicit subsidies to the activities carried out in the new
community centers, e.g. day care for working parents. In general, however, the
willingness of both the Japanese government, and the public, to subsidize
the Burakumin had decreased substantially, even before the beginning of the
economic crisis of the 1990s.
How large have been the expenditures under the SML? In 1993, the
National Government carried out a series of surveys of the 4,442 burakus
designated as the dowa districts that benefited from SML programs. The
surveys directly sampled about 60,000 Buraku households and 24,000 majority
households. It published the findings in 1995, as a report in four volumes. The
report concluded, between 1969 and 1993 the total amount spent on SML
projects was 13,880 billion (Japan, Government 1995: 7; Neary 1997: 65).
This multi-year aggregate was something like 510 percent of Japans annual
GNP in the 1970s. Since 197980 (arbitrarily assumed to be the average-price
year for the period during which SML expenditures took place), Japans
consumer price index has increased about a third (Japan Government 1999:
Table 15-9A). Expressing the total in todays consumer prices gives 18,502
billion. The World Bank estimates that the purchasing-power-parity (PPP)
rate of exchange between the yen and the US dollar in 2000 was 138 per
dollar (World Bank 2002: 232ff), so the PPP total in US dollars comes to
US$134 billion.16
The total number of Burakumin certified as eligible for such benefits was
nearly a million. Were it a million, the total would imply outlays per Buraku
person in PPP US dollars for 2000 of $134,000, extremely high support per
Buraku person. In addition to these benefits, in 1993, 53 percent of Buraku
households in the dowa districts received livelihood security support, well
above the national average of 7 percent, and roughly twice the proportion of
non-Buraku households in the same districts that received security support.
Moreover about a third of the same Buraku population received more than
two-thirds of their rent payments as subsidies (Japan Government, Somucho
1995: 4, 212, as cited by Neary 1997: 70).
The course of the SML brings to mind the concept of reparations in the
meaning that the word has assumed for many in the USA: compensation for
historical injury and injustice, that would not necessarily resolve the problem
of poverty within the US African American community. Thus Upham
concluded that:
The ringing language of the S.M.L. and the conspicuous urban renewal
projects serve as highly visible symbols of the governments commitment

The mobility of Japans Burakumin 145


to social justice while simultaneously leaving the basic structure of
discrimination untouched . . . The Japanese seem more comfortable,
therefore, with giving Burkumin significant amounts of money than in
trying to force employers to hire them.
(Upham 1980: 72)
In a similar vein, Su-lan Reber concluded that the special measures laws were
more like status-based welfare policies than laws that restrict discrimination
(1999: 348). But the welfare argument should not be exaggerated. It is obvious
that most of the financial resources of the SML were used not for welfare purposes but to eliminate the intolerable physical state of the buraku ghettos (and
one cause of majority prejudice against the Burakumin) and for education.
Discrimination persists, most obviously with respect to marriage and
employment decisions, as indicated by the persistent use of Burakumin
blacklists by numerous private investigators. Both Upham and Su-Lan Reber
propose a solution built around a law against discrimination, above all in
employment, but also in school admissions. Su-Lan Reber suggests that
discrimination be made a civil instead of a criminal offense since a lower
standard of proof would be required and a civil offense would most likely
result in settlements out-of-court, which would be more suitable to Japans
judicial system and culture. Moreover, Perhaps a body like the Equal
Employment Opportunity Commission in the USA would be a valuable and
appropriate entity to examine views of discrimination in the first instance. In
addition: A law should be created to outlaw the use of buraku lists for
discriminatory purposes; further a government body should be assigned the
role of overseeing businesses and other organizations that are susceptible to
using these lists for damaging purposes (Su-Lan Reber 1999: 34857).

The passing of the Burakumin?


Notwithstanding the persistence of discrimination, it is probably also true that
in about three decades the SML have facilitated an impressive reduction in
socio-economic disparity between the Buraku minority and the majority. This
is clearly signaled by the reduction in the education gap at secondary level.
Before passage of the SML, few Buraku children received more than the
compulsory 10 years of schooling; currently more than 80 percent of Buraku
youth in the dowa districts complete high school (13 years of schooling).
However, drawing the balance solely with the Buraku population of the
dowa districts gives a very distorted picture of Buraku progress to parity in that
it ignores the entire mobility history of those Burakumin who have passed out
of the buraku into the larger society. Before one can draw the balance on the
mobility progress of the Buraku minority it is necessary to come to grips both
with the ambiguities in the very concept of the Buraku minority and, as a
consequence, the difficulties in developing what might be called a mobility
metric that fits the Buraku case.

146 Jacob Meerman


Serious difficulties come to the fore with every attempt to estimate who is
Burakumin. The governments current definition, used to determine who
benefits from the SML, has a two-step test: first the Burakumin lives in the
former ghettos or special buraku, todays dowa districts, and second the
buraku resident is a descendant of the eta/hinin. This definition will capture
all of the Burakumin if and only if there is complete endogamy within the
Buraku population and there has been no Buraku emigration from the
buraku. Neither assumption is true. There always has been substantial
movement of Burakumin out of the buraku. At the moment of emancipation
(1871) many of the hinin were quickly able to leave their buraku for mainline
communities. But there was also a large influx of people into new burakus
between 1871 and 1920. The coal mining industry greatly expanded after 1871,
for example, and miners very often became buraku residents. (It is not known
to what degree offspring of these new buraku dwellers, were certified as bona
fide Burakumin.) Neary reviewed several reports and noted that:
A survey of conditions in Kyoto in 1938 found that only 57% of those
living within the Buraku areas had been born there and over 60% who had
moved into the Buraku had migrated since 1932. Further, we are told, that
the rate of migration into Kyoto was not as high as in other cities.
(Neary 1989: 149)
It is possible that many of those born in dowa districts and certified as bona fide
Burakumin are descendants of people who moved into the buraku after 1871.
It is likely that the pace of Burakumin out-migration greatly accelerated
after the passage of the SML. The laws promoted a very large increase in
educational attainment among the Buraku minority while the booming
Japanese economy dramatically increased middle-class and other job opportunities for the newly educated Buraku minority. More education also
promoted positive changes in basic attitudes of the more successful Buraku
students (reduction of oppositional identity) and self-perception (increased
self-esteem and confidence) but also reduction of distinctive Buraku speech
patterns and behaviors. All of this probably facilitated the out-migration and
integration of a large number of Burakumin into mainline Japanese society.
Presumably this emigration is the reason why the average age of the Buraku
population within the dowa districts is now above the Japanese mean, while
the Burakumin share of total dowa district population decreased from 72
percent in 1971 to 41 percent in 1993 (Buraku Liberation News, No. 97, July,
1997, 9; Neary 1997: 70). The data on Buraku inter-marriage within the
buraku also indicates an increasing degree of integration. Somucho survey
data from 1993 found that only one-quarter of Buraku married couples living
in a dowa district and under the age of thirty were endogamous, that is
consisted of two spouses who were bona fide Burakumin, while 79 percent of
marriages with husband aged 75 or older were endogamous (Japan, Government, Somucho 1995: Life Style Research Survey, Table 29).
The BLL also insists that many Burakumin have left the burakus and

The mobility of Japans Burakumin 147


attempted to pass as majority Japanese and estimates that there are 3 million
Burakumin alive today. Since the total of those Burakumin still resident in the
6,000 special buraku is estimated at 1.2 million,17 the League estimate implies
that 1.8 million Burakumin have passed into the larger society (Buraku
Liberation News, No. 96, May 1997: 8) and that the Burakumin are 2.4 percent
of the total population. In contrast, the five government estimates made
between 1871 and 1993 estimated a proportion that varied from 1.1 to 1.5
percent, albeit while defining the Burakumin solely in terms of buraku
residency (Meerman 2002b). A crucial unresolved issue in this estimation
exercise is the treatment of inter-marriage by Burakumin who have passed.
At what point, in succeeding generations, do offspring with a single
Burakumin ancestor become identified as being mainline Japanese?
The discussion leads to an important conclusion. It is impossible to gauge
the progress to parity with the majority of the Buraku minority (as measured
by income or other marker of socio-economic status) because membership in
that minority is undefined. Parity could also be measured by the increasing
degree of exogamy over time, since exogamy is the acid test of a minoritys
acceptance by and integration into the larger society.18 But this also has not
been studied.
Nevertheless, given the high degree of mobility into and out of the buraku it
is probable that a large part of the Buraku minority has been integrated into
the larger society. Perhaps, on average, the integrated Burakumin enjoy
higher income and status than those who have remained in the dowa districts
owing to reduced discrimination, access to better education, greater prevalence of a mobility-promoting family culture, better peer culture, etc. If this is
true, redesigning the statistical and other data on the Burakumin to include
information on those Burakumin who have passed would reduce the status
and income disparity of Burakumin with mainline Japanese. Some scholars
conclude that widespread passing by the (presumably) more upward mobile
Burakumin suggests that meaningful comparison of dowa district Burakumin
would be with blue-collar Japanese rather than with the entire Japanese
population (Taira 1970).

Issues for further analysis


High mobility into and out of the buraku also suggests that the Burakumin
might be considered as a segment of a Japanese under-class, rather than the
successors to an historical out-caste. Or consistent with mainline views of the
buraku population as identical with Burakumin, the official definition of
Burakumin could be stretched to include all who are poverty-stricken and
long-term residents of the buraku. Defining bona fide Burakumin strictly as
those of eta/hinin origins now makes the Burakumin a decreasing minority
even within the buraku. Nevertheless, many buraku have retained their
character as reservoirs for low-income segments of the population because of
the inflow of new low-income minorities: Koreans, foreign workers, vagrants,
descendants of Japanese returning from China and other countries, etc. In the

148 Jacob Meerman


realm of public policy, perhaps what is needed is a focus on the buraku population per se, rather than continuing concentration on an ever-more elusive
target, the descendants of the historical eta/hinin. In this way those Burakumin
most in need, still stuck in the buraku, would not be neglected, while Japans
other highly disadvantaged minorities could receive assistance. 19
It would be instructive to ascertain the degree to which that part of the dowa
district Burakumin population, clearly descended from the Burakumin at the
time of the Emancipation Proclamation, is in some sense caught in a poverty
trap.20Analysis that seeks to understand why they remain in the buraku, while
the other historical Burakumin have integrated into the larger society, could
be helpful in advancing work addressing the general problem of the
concentration of poverty in low-status minorities whose history of exploitation
and of low mobility somewhat parallels that of the Burakumin; e.g. African
Americans in the Western Hemisphere or the Dalits of India or native peoples
long over-run by European colonizers as in Australasia. Further Buraku
analysis could build on the work of George De Vos and others who made a
start with this endeavor in their analysis of Buraku sub-culture (itself a
consequence of earlier exploitation) as contributing to the persistence of the
low status and income of the dowa-district Burakumin vis--vis the larger
Japanese population (De Vos 1992).
Some political scientists believe that a deprived minority will rarely be able
to move to parity with the majority without serious political agitation and
frequently the threat of violence by the minority itself. This suggests that the
very militant tactics and strategy of the BLL may have been a necessary
element in accelerating the pace of Buraku integration into the larger
Japanese community. Specifically, without the BLL history of kyudan toso,
and various other techniques of intimidation, mass protest, and energetic
picketing, the SML would never have been undertaken and the Burakumin
would be on average worse off than they are today. A difficult thesis to prove,
but certainly one that merits further attention.

Notes
1 The word Burakumin has long been used as a euphemism to substitute for the
traditional names of the two derivative groups of the Burakumin, the eta (filthy)
and the hinin (less than human), two extremely derogative nouns. The usage
makes sense since the eta/hinin were confined to ghetto villages that became
known as special buraku. Recently the word Burakumin has also become less
correct and has been eschewed by government, and by many writers.
Circumlocutions are used instead, e.g. Buraku people, Buraku struggle, etc.
In these, Buraku becomes an adjective meaning of the Burakumin. This leads
to confusion since sometimes buraku means solely the village or villages of the
Burakumin. It is also misleading since the majority of those living in the historical
buraku are no longer Burakumin. Most recently, some writers in English use
Buraku as a noun meaning Burakumin, compounding the confusion. Moreover,
the Buraku Liberation League (BLL) has started to substitute the use the word
burakujumin (residents of the buraku(s)) for Burakumin (McLauchlan 2001: 1).
In this chapter, Burakumin may be used for brevity or to avoid ambiguity.

The mobility of Japans Burakumin 149


2 The implicit model that underpins this chapter is part of a research program that
compares the mobility experience of four low-status minorities in normative
perspective (Meerman forthcoming). A brief summary of this research is included
in Meerman (2001).
3 The word is made of the kanji characters for same and harmony. It has been
long used by government and others to identify programs designed to reduce
Buraku discrimination.
4 The League gives the following definition of Burakumin: Dowa-related residents
[i.e. Burakumin] are defined as people living in Dowa areas and situated in poor
conditions economically, socially, and culturally and whose socio-economic
positions are considered to be unjustly hampered by discrimination based on the
social class system institutionalized in the historical process of the development of
Japanese society. Using this definition, the League also states that 41 percent of
the residents of the dowa districts are Burakumin (Buraku Liberation News, No.
97, July 1997).
5 For detailed comparison involving a single buraku see Su-Lan Reber (1999: 321).
6 One of the most widely used was based on the National Census of 18723 that
listed the names and addresses of all new commoners, i.e. Burakumin. From
this it was possible to derive the addresses of all burakus. The address list was
updated with the publication of the General List of Buraku Districts, compiled
by the government in 1935. A more recent list, of more than 200 pages, purports to
provide an up-to-date list of all burakus including the number of households per
buraku, and the occupations of their residents (Su-Lan Reber 1999: 31112).
7 The right to school attendance and other social benefits requires registration of
the new-borne in a koseki.
8 Tomohiko Haradas definition is precise: those people who were born, brought
up and living in buraku, those who were not from burakumin family but came to
live in buraku in the recent past and those who are living outside the buraku but
have blood relationship with burakumin all these are considered the burakumin
minority by the majority Japanese, Harada, Tomohiko, Discrimination Against
Buraku Present conditions and problems to be solved, in Long Suffering
Brothers and Sisters Unite! (Buraku Liberation Research Institute (ed.) 1981 cited
by Su-Lan Reber 1999: 300.
9 The 1947 Labor Standards Act prohibits wage and other forms of labor discrimination but is not enforceable.
10 It is possible that independent research on the Burakumin reported in English is
further developed than similar work published in Japanese.
11 In US law these might include battery, kidnapping, and slander.
12 Several teachers at the Yata Middle School supported a candidate for political
office who had circulated an election pamphlet that the BLL considered discriminatory. In the course of the denunciation procedure the teachers were held against
their will until 3 in the morning, were intimidated in many ways and described by
League officers as rats, and prejudiced bigots, inter alia. However food was provided,
rest periods taken, and the rest room was available (Upham, 1987: 879, 99).
13 In 1973, for example, the Prefecture of Osaka budgeted $245 million for
Burakumin improvements (Rohlen 1976: 689).
14 Zendokyo, a national advocacy organization of teachers, officials, and parents has
been particularly active in working with Japans disadvantaged students, above all
the Burakumin (Hirasawa 1989: 100, 104) .
15 In Osaka prefecture, which accounts for a tenth of the Burakumin, 51 percent of
those taking literacy classes in Buraku community centers in the 1980s were adults
in their forties and fifties (Kirasawa 1989: 59).
16 This presumes that the PPP rate of exchange is stable over time.
17 The BLL asserts that in addition to the 4,442 dowa districts with a Burakumin
population estimated in the Somucho surveys in 1993 as 892,751, there are (or

150 Jacob Meerman


were) another 1,558 special buraku with similar Burakumin populations that for
one reason or another did not opt to participate in the SML programs as dowa
districts. See Buraku Liberation News, No. 96, May 1997: 8.
18 Intermarriage may well be considered the last step in assimilation. Sociologists
have so considered it . . . Intermarriage is so crucial a final step, because it marks
the highest degree of social acceptance . . . it is an indication that everything else in
bringing groups together is working (Glazer 1997: 128).
19 The BLL, which increasingly emphasizes human rights in its advocacy work, now
seeks to define those of Korean descendant as Burakumin at least in some dowa
districts (Communication from Alastair McLauchlan, 2001).
20 The percentage of high-achiever buraku children is similar to the national average,
but there is a significantly high proportion of low achievers and a relatively small
number of middle-range performers in relation to the national average (Okano
and Motonori 1999: 125).

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Malaysias New Economic Policy


Has it been a success?
Faridah Jamaludin

Introduction
This chapter aims to analyze the New Economic Policy (NEP), a program
which was introduced in Malaysia in the early 1970s to improve socioeconomic conditions and racial divisions in income disparity. It examines how
subsequent policy makers adapted to market dynamics by formulating policies
that were essentially based on the principles espoused in the formation of the
NEP, and how successful this was in ensuring that the end objectives of the
policy were achieved. Malaysia is very dependent on human capital to achieve
strong economic growth. Its multi-ethnic population gives rise to a variety of
socio-political issues that have a direct effect on its economic development,
as elaborated further below. Certainly it is not the only country to have
undertaken specific government-mandated measures to increase economic
growth while maintaining political stability.
The NEP was launched in 1971 to protect the economic interests of the
indigenous Bumiputera community, which comprises twenty races and ethnic
groups, most notably the Malays. It was aimed at reducing poverty and interracial income inequality while maintaining stability and balance in the country,
so that subsequent economic policies might have a more equitable effect.

The groundwork for progress: history and background


of Malaysia
More than anything else, the racial composition of Malaysia is the key to
understanding the whole picture. It dictates the pattern of the economy,
has helped to shape the constitution, and has influenced the democratic
process and the party system.
(Milne 1967)
Malaysias blessing of natural resources can be deemed indirectly responsible
for its racial composition. The heavy dependence of the countrys economy on
commodities during the era of British colonization led to a dire need for
workers in the various sectors of the economy, particularly paddy cultivation,

Malaysias New Economic Policy 153


tin mining, and rubber tapping. The period of British colonization also saw an
increase in the numbers of Malays working as civil servants, particularly in
more urban areas. This resulted in a shortage of workers to assist in the
extraction of the two other important commodities tin and rubber, which
led to the importation of foreign workers from China and India. Todays
demographic patterns still exemplify the colonial model of industrial
segregation, with the Chinese mainly concentrated in mining and the Indians
in rubber tapping.
Malaysia is today a multi-racial country made up of people who come from
different backgrounds of race and religion and who speak different languages.
The ethnic composition of the country was further influenced by the 1957
Constitution which set lenient immigration laws, awarding citizenship by jus
soli to every person born in the country after Independence. In return for this
liberal citizenship policy, the Malays received certain benefits which gave
them special rights and privileges in the form of subsidies, scholarships,
quotas, licensing, and trade concessions. Some Chinese leaders claimed that
their acceptance of Malay special rights was conditional on the understanding that they would be removed once the Malay/Bumiputera community was
on par economically with the Chinese community. The Malay elite, on the
other hand, claim that acceptance of special rights was forever (Chin 2000).
Despite an impressive growth of 6.1 percent and a total increase in per
capita income of over 30 percent over the decade ending in 1970, the
demographics of Malaysia were still characterized by strong economic
imbalances between urban and rural areas, between agriculture and nonagriculture, as well as between paddy farmers, fishermen, rubber smallholders, and the modern rubber estates. Unemployment rose at an average
rate of 3.7 percent while the labor force increase grew at 2.9 percent (Malaysia
1971). Even though there was an increase in job creation in mining,
manufacturing, government employment, oil palm, and forestry sectors,
unemployment still was high in the agriculture sector owing to a reduction of
employment in rubber estates which lost a fifth of their workforce between
1962 and 1967.
The heavy concentration of the Bumiputera in the low-income agricultural
sector accentuated a widening gap with the non-Bumiputera. Poverty amongst
the Malays was at a much higher level than that of the Chinese and over the
years this gap became more and more visible. British colonial policies tended
to encourage the Malays to maintain their long-standing location in the
traditional agricultural sector of the economy, including the least productive
areas of fishing and rice cultivation. However, the Chinese were engaged in
the more lucrative, highly efficient and productive commercial and industrial
sectors. Growing industrial demand for tin, coupled with the discovery of large
and rich deposits in Larut and Kinta in the state of Perak in the early
nineteenth century had given rise to Chinese investment, British intervention
and domination and finally, injection of foreign, mainly British capital and
technology into the Peninsular. By 1883, Malaysia had become the largest tin

154 Faridah Jamaludin


Table 9.1 Race, poverty, and family income
Race

Poverty rate (%)

Average monthly family income (RM)

Malay
Chinese
Indian
Others

64.8
26.0
39.2
44.8

172.00
394.00
304.00
813.00

producer in the world, supplying about 55 percent of the worlds tin. Although
the Malays held a political stronghold in the country, economically they were
very far behind the Chinese.
Income disparity was not the only source of concern. Overall poverty levels
were also high. In 1970, 49.3 percent of all families in Peninsular Malaysia
were in an income bracket below the poverty level, with rates as high as 86
percent in rural areas. The incidence of poverty was especially prevalent
amongst the Malays who had an average monthly income of about half that of
the Chinese (Table 9.1).
In the late 1960s, Malay frustration over the continuing economic imbalances, not only in income but in employment patterns grew, as government
pledges for greater Malay participation remained unfulfilled. Exacerbating
this discomfort was the failure of the government to secure an overall twothirds majority in the 1969 general elections, which produced fear of a political
weakening of the National Front, a three-party coalition comprising The
United Malays National Organisation (UMNO), The Malaysian Chinese
Association (MCA) and The Malaysian Indian Congress (MIC). The Front
had defended the existing Malay special rights guaranteed in Article 153 of
the Malaysian Constitution. With the loss of the secure foothold in government, communal unease grew and racial tensions finally ignited into a riot on
May 13, 1969, in which 169 people were killed.
As a crisis response, the government met to identify the problems and
remedy the disturbing economic and political conditions. Income disparity
and different levels of growth among the various races were cited as the main
sources of the inter-ethnic strife. After a series of short- and medium-term
plans the NEP was finally formulated in the Second Malaysia Plan.

A blueprint for the progress and unity of our nation:


formulation and implementation of the NEP
Todaro (1997) believes that planning in developing countries is made
necessary by the inadequacies of the market as a mechanism to ensure that
individual decisions will optimize economic performance in terms of societys
preferences and economic goals. This clearly applies to Malaysia prevailing
dissatisfaction with the economic imbalance reached a climax in the 1969
racial riots in Kuala Lumpur. It was recognized that the period of British

Malaysias New Economic Policy 155


colonization had left a fragmented economic organization in the country
which needed repair. The government launched the NEP in 1971, during the
Second Malaysia Plan spanning the years 19715. Rather than constituting a
single economic reform per se, it functioned more as a set of objectives and
resulting policies. The NEP represents a dynamic set of policies that were
continually amended to take account of changing external conditions as well
as the programs own successes and failures (Stafford 1997).
The NEP, which was necessary to break the link between racial identification and occupational niches, also was an attempt by the government to
achieve a more equitable distribution of income among the various ethnic
groups. Its launch marked a period of heavy government intervention and
planning in the economy. The two-pronged policy sought to eradicate
poverty among all Malaysians and to restructure Malaysian society so that the
identification of race with economic function and geographical location is
reduced and eventually eliminated, both objectives being realized through
rapid expansion of the economy over time (Malaysia 1971).
The policy was designed to span a period of 20 years. The target was to have
the the Bumiputera own 30 percent of the countrys wealth by 1990, an
increase from about 2 percent in 1970. The Outline Perspective Plan (OPP),
197090, provided a series of long-term targets designed to help restructure
the racial composition of employment and the ownership of wealth. It specified goals for corporate ownership and employment by racial group in 1990,
with an emphasis on corporate assets, presumably to expand Malay participation in the modern non-agricultural sectors in which Malay ownership was
markedly under-represented. The government emphasized that the restructuring of the economy was to be undertaken by rapid expansion, and therefore
there should be no grounds for fear or anxiety on the part of other Malaysians
that government intervention in the private sector on behalf of the Malay
community will lead to a deprivation of the rights or prospects of non-Malays
(Malaysia 1973).
Only by the launch of the Third Malaysia Plan (197680) (Malaysia 1976,
1979) did the government have sufficient data for more specific planning.
The Third Plan projected that the aims of the NEP could be achieved in
quantitative terms:
1
2

The incidence of poverty was to be reduced from 49.3 percent in 1970 to


16.7 percent in 1990;
The ownership pattern of share capital in limited companies was to
change from the ratio of 2.4: 34.3: 63.3 (Bumiputera: Non-Bumiputera:
Foreign) in 1970 to 30: 40: 30 by 1990.

Through the NEP, the government adopted a HarrodDomar growth outlook, concentrating on investment with the expectation that industrialization
would pull the rest of the economy along. Under the leadership of Tun Abdul
Razak, the government pursued the following four main strategies:

156 Faridah Jamaludin


1

2
3
4

Increasing productivity and living standards of the poor through rural area
urbanization (Rural Development Policies) and developing backward
states and areas through new territory development programs.
Reducing imbalance steadily and progressively, through overall economic
development and direct income transfers.
Increasing Bumiputera asset ownership by stock allocations and public
ownership through intervention in commodity markets.
Shaping a Bumiputera culture inclined towards commerce and industry by
establishing agencies entrusted with promoting greater commerciality
among the Bumiputera such as Bank Pembangunan (Development Bank),
Bank Bumiputera (Indigenous Bank), and Amanah Saham Nasional
(National Share Ownership Trust). The latter was a scheme for mobilizing Malay savings for equity investment by transferring corporate assets
held under trusteeship to the Bumiputera.

Various institutions were set up under the NEP to oversee the implementation of these policies. In 1970 the Agricultural Bank of Malaysia was
established to provide agricultural loans and credit. During 197180, a total of
RM642 million loans was approved by the bank, mainly for paddy production,
tobacco production and marketing. The Federal Agricultural Marketing
Authority (FAMA) was reorganized in the 1970s as an advisory service agency
disseminating market information. The Rubber Industry Smallholders
Development Authority (RISDA) was established in 1972 to administer a
replanting subsidy scheme.
The task of restructuring equity distribution fell heavily on PERNAS
(National Corporation) and the PNB (National Equity Corporation).
PERNAS concentrated on building up companies for its own-account trading
and the PNB was a holding company which held assets worth RM10 billion in
1990, investing in areas such as industry and commerce, mining, properties
and plantations, most of which will eventually be transferred to Bumiputera
individuals through a unit trust scheme, Amanah Saham Nasional.
The NEP concentrated on development by trusteeship. The trustees were
a small group of political decision makers whose visions determined the
formulation of the policies, and there was a large body of officials and public
service staff responsible for the execution of these policies and programs.
Mehmet (1986) believes that under trusteeship, politicization has been given
official sanction and has been institutionalized within the entire spectrum of
the fight against rural poverty. Under the policy, the Bumiputera received
favorable treatment under licensing and franchising regulations, quotas in
jobs and university places, concessional loans and grants to enter industry and
trade and privileged access to capital markets in line with the goal of equity
restructuring.
In mid-1980s, under the Mahathir government, the Look East policy was
launched; foreign investors were encouraged to conduct joint ventures with
the Bumiputera. Big government projects were developed, such as the

Malaysias New Economic Policy 157


national car, Proton, and Perwaja, a steel industry company. A bold policy of
heavy industrialization also was initiated, with an emphasis on the oil refining
sector.

Active participation, not disruptive redistribution:


the economic consequences of the NEP
This section examines the effects and changes in several areas of the economy
during and after the NEP policy period. It attempts to evaluate the success of
the policy in alleviating poverty and ameliorating income inequality during
this period while examining the overall impact on the economy.
Poverty alleviation under the NEP
Table 9.2 shows that by 1987, poverty levels were declining at a promising rate,
well on the way to achieving the targets set out under the NEP. Among the
various races conditions had also improved; according to official statistics
there had been a 41 percent reduction in poverty levels among the Malays, a 19
percent reduction among the Chinese and a 30 percent reduction among the
Indians. As a result, the gap between inter-racial poverty levels narrowed, a
trend that assisted in achieving the second target of the NEP, reducing income
inequality. A breakdown of poverty levels within the economy show that
between the years 1970 and 1984 the overall poverty level in the rural strata
declined by 34 percent and in the urban strata by 13 percent. Table 9.3 provides a detailed insight into poverty trends within the various economic sectors.
From the data it can be seen that the poverty rate for all main poverty
groups, except that of small coconut growers, fell steadily throughout the
period. However, it should be noted that this does not necessarily imply that
all members of the rural strata experienced an improvement in their standards
of living. There had been a reduction in absolute numbers of the rural working
population over the years as the workforce composition had shifted in favor

Table 9.2 Incidence of poverty, 195787 (percent)

Rural
Urban
Total
Malay
Chinese
Indian

Pre-NEP (actual)

NEP targets

NEP results (actual)

19578

1970

1980

1990

1980

1984

1987

59.6
29.7
51.2
70.5
27.4
35.7

58.7
21.3
49.3
64.8
26.0
39.2

43.1
23.0
15.8
9.1
33.8
16.7
Decline
Decline
Decline

37.7
12.6
29.2
39.3
16.5
20.5

24.7
8.2
18.4
25.8
7.8
10.1

22.4
8.1
17.3
23.8
7.1
9.7

Sources: Malaysia (1976, 1981, 1986, 1989).

158 Faridah Jamaludin


Table 9.3 Peninsular Malaysia: poverty levels according to urbanrural areas,
1970, 1976, 1984
Strata

1970
Poverty rate (%)

1976
Poverty rate (%)

1984
Poverty rate (%)

Rural
Small rubber tappers
Rice farmers
Estate workers
Fishermen
Small coconut growers
Other farmers
Other industries

58.70
64.70
88.10
40.00
73.20
52.80
89.00
35.20

47.80
58.20
80.30

62.70
64.00
52.10
27.30

24.70
43.40
57.70
19.70
27.70
46.90
34.20
10.00

Urban
Agriculture
Mining
Manufacturing
Construction
Transportation and public
amenities
Trading and services
Unspecified sectors

21.30

33.30
23.50
30.20

17.90
40.20
10.10
17.10
17.70

8.20
23.80
3.40
8.50
6.10

30.90
18.10

17.10
13.90
22.40

3.60
4.60
17.10

Total

49.30

39.60

18.40

Sources: Department of Statistics, Investigation after Survey (1970); Agricultural Survey


(1977); Household Income Investigation (1984).

of urban employment sectors such as manufacturing, an area in which


Bumiputera involvement rose from 29 to 33 percent.
Amelioration of income inequality
The NEP period also saw a successful reduction in income disparities among
the various ethnic groups. The Gini coefficient figures for the period 197087
show an overall decline from 0.50 to 0.46, indicating a positive trend in the
reduction of income inequality. Table 9.4 provides a detailed breakdown
of the Gini coefficient figures. However, it is interesting to note that the
coefficient figures of the rural Malays showed little improvement, rising from
0.42 in 1970 to 0.43 to 1987. Despite a higher concentration of wealth amongst
the more influential Malay businessmen who benefitted from the NEP
policies, a trickle-down effect to the rest of the community was not achieved.
The phenomenon of intra-ethnic inequality led to intense debate over the
benefits of the NEP. A deeper analysis of this will be conducted below.
Equity restructuring
One of the central concerns of the NEP was wealth distribution and corporate
ownership. The Bumiputera in particular were encouraged to obtain shares in

Malaysias New Economic Policy 159


Table 9.4 Peninsular Malaysia: Gini coefficients, 197087
Ethnicity

Strata

1970

1976

1984

1987

Malay

Rural
Urban
Total
Rural
Urban
Total
Rural
Urban
Total

0.42
0.45
0.47
0.40
0.47
0.46
0.36
0.50
0.46
0.50

0.47
0.48
0.49
0.49
0.51
0.51
0.39
0.50
0.46
0.53

0.45
0.46
0.47
0.41
0.46
0.45
0.35
0.44
0.42
0.48

0.43
0.44
0.45
0.40
0.44
0.43
0.35
0.44
0.40
0.46

Chinese
Indian
All

Source: Osman-Rani (1990).

corporate assets to increase their participation in modern non-agricultural


sectors. The distribution of corporate assets among the various races between
1970 and 1990 is captured in Table 9.5. Despite a 17 percent increase in
Bumiputera share ownership, it can be seen that the wealth restructuring
targets of the NEP had not been achieved by the end of the policy period.
However, although Bumiputera ownership was still short of policy targets,
other Malaysians, namely the Chinese, had not lost out, as their share
ownership exceeded the estimated target by 12 percent. On the whole the only
group to have lost out from this policy were foreign residents, who
experienced an actual reduction in their share in the wealth pie.
Nevertheless, owing to its focus on one ethnic group, the NEP was a
controversial policy that was resented by the non-Bumiputera in Malaysia.
Chinese complaints included allegations that the second prong, the restructuring of the economy to help the Bumiputera, was given too much priority over
the first prong, eradication of income regardless of race. Table 9.6 illustrates
the growth rates of income levels among the various races between 1979 and
1984 so that we may examine the basis of these allegations.
Official statistics indicate that the Bumiputera community benefitted most
from the policies implemented under the NEP. The average growth rate of the
Bumiputera income was 1.6 percent more than that of the Chinese and 3.6
percent more than that of the Indians. In real terms, their average income
increased by about 30 percent, whereas incomes of the Chinese and Indians
increased by 20 percent and 9 percent, respectively.
With the positive average growth rates of Chinese and Indian income, it
cannot be said that the other races suffered as a result of the NEP policies,
even though they were not given the preferential treatment that the Bumiputera were. Nevertheless, the emphasis on the economic status of the
Bumiputera led to a reduction in disparity between the ethnic groups. The
average Bumiputera household income increased from 52 percent of Chinese
income to almost 57 percent, and from 65 percent to 78 percent of the Indian

160 Faridah Jamaludin


Table 9.5 Ownership of share capital in limited companies, 197090 (percent)

Bumiputera
Individuals
Trust agencies
Other Malaysians
Foreign residents

Pre-NEP
(actual)
1970

Estimated
targets
1980

Estimated
targets
1990

(Actual NEP results)


1980

1985

1988

2.4
1.6
0.8
34.3
63.3

16.0
3.4
12.6
40.4
43.6

30.0
7.4
22.6
40.0
30.0

12.5
5.8
6.7
44.6
42.9

17.8
10.1
7.7
56.7
25.5

19.4
13.0
6.4
56.0
24.6

Source: Osman-Rani (1990).

Table 9.6 Peninsular Malaysia: average monthly household income according to


ethnic groupings, 1979 and 1984
1970 base price

Current prices

Ethnic group

1979

1984

Average
growth rate
19804 (%)

1979

1984

Average
growth rate
19804 (%)

Bumiputera
Chinese
Indian
All ethnic groups

296
565
455
417

384
678
494
494

5.3
3.7
1.7
3.4

492
938
756
693

852
1,502
1,094
1,095

11.6
9.8
7.7
9.6

Source: Department of Statistics, Labour/Household Income Investigation (1980); Household


Income Investigation (1984).

income. It can thus be concluded that although on a social front the second
prong was not widely accepted, it nonetheless succeeded in achieving its main
aim of reducing inter-ethnic income inequality.

The National Development Plan (1990)


The post-NEP policy period
At the end of the NEP period, despite significant improvements in poverty
levels and income inequality trends, the full objectives of the NEP had not
been achieved: the Bumiputera were in control of only 19 percent of the total
corporate equity, 11 percent short of the intended target. Income disparities
had also failed to decline to target levels. Structural and sectoral constraints
still existed where the industrial base was restricted and limited the prospects
of growth. There were shortfalls in the availability of infrastructure, industrial
land, water and energy, exacerbated by a recession in the economy in the late
1980s which resulted in mass retrenchment and thus a slowing down of growth.
In the last five years of the NEP, it was apparent that the improvements in
the socio-economic conditions were meagre in comparison to what had been

Malaysias New Economic Policy 161


targeted. The Fifth Malaysia Plan (198690) reported that despite improvements in the national poverty level and the reduction of income disparity,
achieving NEP targets of a 30 percent Bumiputera equity ownership and
eradication of poverty by the end of the policy period were unlikely. In
February 1991, Prime Minister Mahathir Mohamad introduced Vision 2020, a
long-term plan which provided a framework for achieving socio-economic
targets within a 30-year time period. Medium-term targets were set when the
Sixth Malaysia Plan (19915) (Malaysia 1991) was embodied within the
Outline Perspective Plan 2 (OPP2), a blueprint which encompassed a 10-year
time frame for unified development towards 2020, outlining the targets for
visible accomplishments. As part of OPP2 and to continue the efforts of the
government in achieving further reduction in poverty levels and income
inequality, the National Development Plan was launched in 1991, formulating
the subsequent economic development of the economy.
The National Development Plan
The National Development Plan (NDP) did not differ greatly from the NEP,
as the Bumiputera still receive favourable treatment in rights to land, employment in the public services, placement in higher education establishments,
licences and scholarships. However, a major feature of the NDP was that it set
no time frame for the attainment of the 30 percent Bumiputera ownership
target, and priority was instead placed on a 7 percent annual growth target
believed necessary for Malaysia to achieve an economy that is competitive,
dynamic, robust and resilient. The NDP also aimed to set the pace to enable
Malaysia to become a fully developed nation by the year 2020.
The new policy reiterated the governments commitment to the economic
liberalization measures introduced in the mid-1980s. Its new dimensions
comprised:
1

2
3

Attempts to eradicate hardcore poverty while at the same time reducing


relative poverty. Hardcore poverty was estimated using half the povertyline income, which in 1995 was RM425 per month for a household size of
4.6 in Peninsular Malaysia, as a benchmark.
The development of an active Bumiputera Commercial and Industrial
Community (BCIC).
Greater reliance on the private sectors involvement in the restructuring
process.

This section will now examine the first two dimensions.


Development strategies for the Sixth Plan
The emphasis in the Sixth Malaysia Plan was placed on the success already
achieved during the NEP period and this enhanced the growth momentum to

162 Faridah Jamaludin


bring about a better distribution of income. However, a main difference in this
new policy was that owing to the improvements in poverty levels over the
previous 20 years, the NDP would encompass methods that would ensure that
poverty alleviation programs were targeted to the most poverty-stricken group
of the population as a whole, regardless of race. Hardcore poverty was
prioritized and this step was made possible because the NEP, although not
entirely successful in achieving its targets, had managed to secure a platform
from which economic growth and income distribution policies could be
effectively implemented.
In an attempt to move away from a planned economy and allow market
forces to determine demand and supply of goods and services, the government
launched numerous programs and schemes to encourage and develop a wider
strata of entrepreneurs, especially among the Bumiputera. The implementation of the BCIC programmes gave Bumiputera entrepreneurs an opportunity
to gain a strategic foothold in business and industry through the implementation of schemes such as the vendor development program, the franchize
development program, and the venture capital scheme.
Poverty eradication under the NDP
As stated above, the NDP was primarily concerned with the reduction of
hardcore poverty. Two years after its implementation there had been a
further fall in poverty levels, the incidence of poverty in Malaysia declining
significantly from 42.4 percent in 1976 to 13.5 percent in 1993. The hardcore
poverty rate had also declined from 19.6 percent in 1976 to 3 percent in 1993.
Reflecting the progress achieved in poverty alleviation, the mean monthly
household income for Malaysia in current prices had, in general, improved
from RM505 per month in 1976 to RM1,563 per month in 1993. Government
allocations for the hardcore poverty programs in 1993 were RM280 million.
The number of poor and hardcore poor households in Malaysia was
considerably reduced, from about 975,800 and 415,300 households in 1976 to
517,200 and 116,400 households, respectively, in 1993, and by the end of 1995,
the poverty rate as a percentage of total households had significantly improved
(Table 9.7).

Table 9.7 Poverty rate as a percentage of total households, 1995


Poverty

1970

1980

1990

1995

Hardcore
Urban
Rural
Overall

24.6
58.6
49.3

12.6
37.7
29.2

4.0
7.5
21.8
17.1

2.2
4.1
6.1
9.6

Source: Malaysias Socio-Economic Development (Presentation Slides), Economic Planning


Unit, Prime Ministers Department, Kuala Lumpur (1996).

Malaysias New Economic Policy 163


Bumiputera Commercial and Industrial Community
The new dimensions of the NDP also emphasized the acceleration in the
growth of an active Bumiputera BCIC. In an effort to create an active BCIC
capable of competing in strategic industries and sectors of the economy,
several new entrepreneurial development programs were introduced while
the practice of allocating a portion of new issues of corporate equity to
Bumiputera investors was continued. Between 1991 and 1995 the ownership
of share capital of limited companies rose considerably among the Bumiputera,
with an average annual growth rate of 12.1 percent. However, despite an
equity ownership that was 77 percent higher in 1995 than it was in 1990, the
government felt that the figures still demonstrated an inadequate Bumiputera
share in corporate equity. This was primarily owing to the rapid growth in the
acquisition of corporate equity, particularly by foreigners, consistent with the
relaxation in regulations pertaining to corporate ownership introduced to
attract foreign direct investment (FDI). The non-Bumiputera also reaped the
benefits of a larger total corporate equity, which increased from RM108,377.4
million in 1990 to RM 179,792.2 million in 1995 (Table 9.8).
It can be seen that the policies undertaken under the NDP by no means only
rewarded the Bumiputera. Non-Bumiputera ownership of share capital grew
significantly, and a negative growth was apparent only in the case of the trust
agencies which was in line with the governments move to reduce state intervention in the share allocation programs.
As part of the BCIC program, the government in the Seventh Malaysia Plan
(19962000) continued efforts to assist the entry of Bumiputera entrepreneurs into the business sector by providing one-off assistance in the forms
of training, research and development (R&D) and technical support, credit
and business infrastructure facilities and product promotion. JVs among
Bumiputera, non-Bumiputera and foreign entrepreneurs were also an
important aspect of the program, with a financing facility fund amounting to
Table 9.8 Annual growth rate of share capital ownership of limited companies,
1990 and 1995
Ownership group

Average annual growth rate (%)

Bumiputera
Individuals and institutions
Trust agencies
Non-Bumiputera
Chinese
Indians
Others
Foreigners
Nominee companies
Total

12.1
16.8
8.2
9.0
8.3
20.6
35.1
12.6
10.2
10.7

Source: Malaysia (1996).

164 Faridah Jamaludin


RM280 million provided by a consortium of banks. Efforts were geared
toward increasing and mobilizing Bumiputera savings more effectively
through institutions such as Amanah Saham Nasional, Amanah Saham
Bumiputera and state unit trust schemes.

Higher education policies in Malaysia


Education was another important area during the NEP period. As in most
developing countries, improving human capital was a main objective, as well
as improving the quality of education for the building of a progressive society
oriented towards modern science and technology (Malaysia 1971). Higher
education was an important tool for achieving policy targets, as a key policy
measure in the formulation of the NEP, it involved controversial implications
for the socio-economic front.
Education as a policy tool
The Second Malaysia Plan saw continued stress on education as one of the key
means of developing human capital and expertise. One of the fundamental
aims of the plan was the promotion of equal opportunities for people of all
races to benefit from the modernization of the economy. Education was seen
as a powerful measure in reaching this aim and its development was given
priority to insure availability and wider access. Higher education was a very
salient equity issue as it was often perceived as a means of restructuring
Malaysian society to eliminate the identification of ethnic communities with
restricted economic functions (Lee 1996).
The implication of education policies
Under the Second Malaysia Plan, investment programs in higher education
were continued in the six colleges and universities. Between 1970 and 1990
Majlis Amanah Rakyat (Indigenous Trust Council) allotted RM700 million,
or 67 percent of its total budget, for educational development. In order to
insure greater Bumiputera representation in various professions and
occupations in the modern sector, the government implemented a racial quota
system: the ethnic composition of the students in the universities and faculties
was to reflect the ethnic composition of the country as a whole. When
admission to the University of Malaya was determined solely on the basis of
examination results, only 20 percent of the students admitted were Malays,
with most of the non-Malays being Chinese (Hashim).
In 1975, amendments were made to the 1971 Universities and Universities
Colleges Act whereby universities and tertiary institutions had to admit more
Bumiputera students to redress the chronic imbalances between the Bumiputera and non-Bumiputera (Malaysia 1975). There is presently a 55:45
percent Bumiputera:non-Bumiputera quota system in local public institutions.

Malaysias New Economic Policy 165


Table 9.9 Racial composition of university students, 19667 and 1985
Bumiputera

Chinese

Indians and others

Total

University Malaya
(19667) (%)

1,038
28.8

2,034
56.5

521
14.7

3,603
100.0

All Universities
(1985) (%)

23,841
63.0

11,241
29.7

2,756
7.2

37,838
100.0

Source: Karthigesu (1986).

This step was not taken without opposition; opponents argued that it was
a biased and unfair university entrance selection system, leading to lower
educational standards. Selvaratnam (1989) believes that the implementation
of this policy eroded a deeply entrenched university tradition, admission of
students based exclusively on merit.
Table 9.9 shows that prior to the NEP period, the number of Bumiputera
students in University Malaya was less than half of the total student population and Chinese students were the majority. By 1985, the pattern had
drastically changed: 63 percent of the students were Bumiputera and more
than 95 percent of government scholarships for overseas tertiary education
were awarded to Bumiputera students. On top of the quota restrictions,
the government established MARA (Majlis Amanah Rakyat/Council of
Indigenous Trust) institutes and colleges throughout the country; these
offered employment-related courses such as accountancy and admitted
mainly Bumiputera students. This illustrates the greater opportunities
available for Bumiputera students, but their placement was at the expense of
the Chinese and Indians. Each year thousands of Chinese students go abroad
for their tertiary education, creating deep resentment owing to the high costs
involved. However, in the mid-1990s the government decided to let foreign
universities set up branches in Malaysia to give more non-Bumiputera
students access to tertiary education inside the country.
The number of Bumiputera students in local universities pursuing economics
and management courses at degree level increased from 7,188 or 16.6 percent
of the total number of students in local universities in 1990 to 12,700 or 20.5
percent in 1995. In technical-type courses, there was an increase from 3,835
students in 1990 to 5,500 in 1995. Out of a total of 50,600 Malaysian students
studying abroad in 1995, about 20,000, or 39.5 percent, were Bumiputera
students, majoring mostly in subjects such as science, engineering, medicine,
economics, business, and management.
Socio-economic consequences of education policies
Not surprisingly, this preferential treatment in favor of Bumiputera students
resulted in polarization of the races rather than racial harmony. Many

166 Faridah Jamaludin


academically qualified non-Bumiputera are denied entry into local universities
and have had to go overseas or seek further education at private colleges.
Young and Ng (1992) find that in 1985, out of a total of 22,684 students
studying overseas, 73.4 percent were non-Bumiputera who had failed to gain
admission to local public institutions of higher learning or who had been
offered places in courses not of their choice. Lee (1996) believes that polarization was perpetuated as a result of different ethnic groups seeking higher
education at different institutions.
A further dichotomy exists within the Bumiputera: results of government
examination equivalent to Britains O and A Levels show that among the
top 10 percent, Malays number only 3 percent and of the bottom 20 percent
they account for almost 80 percent (Ungku Abdul Aziz 1989). Aziz believes
that the source of the problem lies in the village schools, which lack basic
facilities and amenities; as a result there is a growing split within the Malay
community between the English-educated, urban-born and bred and the
Malay-educated, recent arrivals to the towns. Findings by Mehmet and Yip
(1985) show that the Malaysia scholarship policy discriminates in favor of
richer households, where a more affluent Bumiputera is 21 times more likely
than a poor one to be awarded a scholarship. They show that intra-Malay
inequality of opportunity in higher education is significant, and conclude that
scholarships are regressively distributed among all ethnic groups, favoring
richer households. Selvaratnam (1989) believes that this implies that the
scholarship policy has contributed to reproducing and maintaining a socioeconomic stratification within the Malay community, rather than promoting
the upward social mobility of the poor Malays. This inevitably leads to a
dualism within the Bumiputera themselves as well as Malaysians in higher
education as a whole.
The educational policies adopted during the NEP period can thus be seen to
have had both positive and negative repercussions. The policies permitted
incorporation of a greater number of students into the higher educational
system, both locally and abroad, which led to a higher trained workforce.
However, a policy which was formulated to solve a problem of racial crisis and
inequality paradoxically resulted in a more divided Malaysian community at
both an inter-ethnic and intra-ethnic level. The dualism that exists as a result
of the government-assisted steering of educational paths for the different
races as well as within the Bumiputera community itself has led to a more
divided nation with different mentalities and perspectives. While the impact is
not seen in terms of violence or tension, it propagates a a dichotomy akin to a
class system which contradicts the over-riding aim of the NEP and NDP of
promoting national unity. The education policies therefore require refinement
to ensure that the gain in the quantity of Bumiputera graduates is not at
the expense of meritocracy and international competitiveness, as well as a
cooperative and integrated Malaysian society.

Malaysias New Economic Policy 167

Analytical review
The NEP and NDP periods: impact on the socio-economy since 1970
It could be surmised that the NEP and NDP were both successes. Based on
empirical evidence, by the end of the NEP period poverty had been reduced to
more than half of its level in 1970, and by 1987 rural poverty had decreased by
36.3 percent and urban poverty by 13.2 percent, resulting in a total reduction
of well over 30 percent for the entire population. In terms of the second prong
of the policy, wealth restructuring among the races, the Fourth (Malaysia
1981) and Fifth Malaysia Plans illustrate success since larger percentage of
income was held by Malays during the period of the NEP policy (Table 9.10).
However, statistics can be interpreted in many ways to produce a desired
outcome. It is possible to downplay the significance of the figures, especially
since Malay urbanization increased from 27 percent in 1970 to 37 percent in
1985. Furthermore, the population composition of the country has evolved;
with the Chinese sending their capital and young abroad, it is difficult to
ascertain the extent to which the increase in Malay income percentage can be
attributed to the policies undertaken during the NEP period.
In his book The Malay Dilemma, Mahathir Mohamad (1970) was fixated on
establishing a middle-class Malay entrepreneurship. The NEP was seen as a
mechanism of channeling state-owned enterprises into the hands of a larger
proportion of the Bumiputera which would then ostensibly lead to an equality
between the races. The 1975 Industrial Coordination Act (ICA) made
unexempted companies ensure that there was at least 30 percent Bumiputera
participation in their ventures. Specific projects approved by the Government
qualify for an exemption, such as acquisitions by ministries and government
departments, by Ministry of Finance Incorporated, by Menteri Besar Incorporated, and by State Secretary Incorporated, and privatization projects,
whether at the Federal or State level, are considered as approved by the
Government and therefore exempted from the guidelines of the Foreign
Investment Committee governing the ICA. An investigation by Yasuda
(1991) on the effects of the ICA on the Bumiputera between 1975 and 1985
discovered that Bumiputera ownership of corporate stock grew from 2.4
percent in 1970 to 7.5 percent in 1975, and from 12.5 percent in 1980 to 19.1
percent in 1985.
Table 9.10 Malay median income as a percentage of Chinese median income,
197084 (percent)
1970

1973

1976

1979

1984

44

45

44

47

57

Sources: Malaysia (1981: 56); Fifth Malaysia Plan: 99.

168 Faridah Jamaludin


However, what is seldom mentioned are the NEP ground rules that were
established to prevent bloodshed. Few Malaysians, Malays or otherwise,
challenge the notion that Malaysia is a Malay-dominated country where the
political culture favors the majority. Nevertheless, there is a safety-valve in the
form of a provision that allows non-Malays a free hand in business, provided
they do so with a Malay partner. This gives the minorities a non-violent avenue
for their energies and also provides Malaysia a chance to learn the business
skills of their Chinese partners (Pillai 1996). A phenomenon generally known
as the Ali Baba business concept began during the NEP period where in
the early 1980s, despite a considerable number of Malays obtaining top
positions in major corporations, their contributions to the businesses
were often nominal. Most of the Malays who were active in the corporate
sector were merely playing high-profile roles in their companies, with their
Chinese partners often running the actual operations behind the scenes
(Hing 1984).
Malaysian economic statistics show that there was an increase in the overall
standard of living in the country during the NEP period, while absolute
poverty was reduced and inter-ethnic inequality improved. Overall, interethnic income inequality was reduced, the Gini coefficient decreasing from
0.50 in 1970 to 0.46 in 1987. The implementation of the NEP was not without
its share of costs, however. Although it cannot be denied that the NEP was
relatively successful in reducing poverty and ameliorating inter-ethnic income
inequality, it also led to an exacerbation of intra-ethnic income inequality
among the Bumiputera. Puthucheary (1984) finds that among Malays, the
income share of the top 10 percent rose from 42 percent to 53 percent
of income received by all Malays. He concludes that at most 5 percent of
Malays benefited from such policies.
As the economy of Malaysia is highly politicized, the success and failures of
the NEP, despite its name, cannot be measured solely on economic statistics.
Critics of the policy believe that it has resulted in the creation of a substandard and subsidy-dependent Bumiputera community, an example being in
the quota system and scholarships granted in the education system which has
led to dualism at both an inter-ethnic and an intra-ethnic level.
Osman-Rani (1990) believes that the effects of the NEP also include the
creation of a rentier entrepreneurial class based more on political connections
than on competence and efficiency. This phenomenon is otherwise known as
cronyism (a word coined in the US Truman administration in the 1950s
which was accused of appointing friends of the President to government posts
without regard to their qualifications). This derogatory term has frequently
been used to characterize the modus operandi of the Malaysian government
and large corporations often, but not necessarily, fronted by Malay businessmen with important political connections. There also has been an increased
resentment among the non-Bumiputera for whom the achievement of the
NEP objectives has been costly and discriminatory. The Chinese believe that
the NEP quota system should be abolished and government intervention in

Malaysias New Economic Policy 169


favor of one ethnic group hostile towards them ended. In the words of Suhaini
and McDonald:
The NEP has been almost exclusively directed at getting more Malays into
the modern economy, more Malays into urban professional and executive
jobs, and more private-sector capital under Malay ownership; there are
still not many Chinese senior officials, diplomats, soldiers or policemen;
the Indian share of the corporate sector remains a little over 1 per cent
after 20 years of the NEP, and some 96 percent of the landless settled on
new rubber and oil palm schemes are ethnic-Malay.
(1989: 00)
The effects of discrimination are especially noticable in the non-public
sector. The Chinese continue to outnumber the Malays in the private sector
fields of doctors, dentists, engineers, accountants, architects, and lawyers,
although between 1990 and 1995, the average annual growth rate of the
Bumiputera in both public and private sector accountancy, medicine, law, and
surveying were much higher than those of the Chinese and Indians.
The NEP as an infant industry
The Bumiputera special rights entrenched in the NEP are comparable to
Frederich Lists venerable infant industry argument. The positive discrimination applied in the policy can be likened to domestic infant industries being
awarded special protection from international competition in terms of tariffs,
subsidies and embargoes. To assist in creating a Bumiputera commercial and
industrial community, the government participated directly in commercial
and industrial undertakings. This was carried out through joint ventures (JVs)
with the private sector and wholly owned enterprises, by constructing business
premises, investing directly in productive commercial and industrial enterprises which were to be controled and managed by the Bumiputera and
promoting in-service training programs and other activities covering financial
and technical assistance.
An unavoidable outcome has been a proliferation of state-owned enterprises (SOEs), especially state-owned companies, established under the 1965
Companies Act (Osman-Rani 1990). These include PERNAS and the PNB
which have powers to establish subsidiaries to allow them to vary ownership
structure in accordance with the requirements of the NEP (Puthucheary 1984).
The justification for these agencies can be found in Skrentnys (1996) arguments for the need of governmental agencies in carrying out the affirmative
action policies in the United States:
The question remains why a technical discourse emphasising efficacy and
efficiency would be persuasive in the advocacy of a controversial if not
illegitimate model of justice. The answer requires attention be paid to the

170 Faridah Jamaludin


broader historical context of the civil rights enforcement agencies . . .
administrative agencies themselves were created as part of an increasing
emphasis on the efficient realisation of a just society, on solving social
problems. The raison dtre of the agencies was problem solution, not
institutionalisation of a model of procedural justice.
The drawback of these enterprises in Malaysia is that they lack accountability.
Their semi-autonomous status excludes them from being subjected to parliamentary scrutiny, which results in an inefficient system which could prove
uncompetitive and dampen economic growth.
As the infant matures . . .
Like any infant industry, government support has to cease at a certain point to
prevent over-reliance, complacency, and non-competitiveness in the economy.
In the case of the NEP, 1990 was the initial cut-off point of government aid,
but the failure to achieve fully the desired outcome of the policy led to its
indefinite extension, albeit under another name and focusing on different
priorities. The flexibility of the NEP and NDP has allowed the economy to
mature and evolve into a more open economy with a more global outlook.
Malaysian economic policy makers are now more influenced by international
economic affairs in shaping their views by concentrating on FDI, increasing
global competitiveness and an export-oriented economy. One of the most
important changes that affected the role of Malaysias economy was the Plaza
Accords agreed to by Japan and the USA in 1985, which realigned dollaryen
exchange rates.
The strengthening of the yen caused production costs to skyrocket in East
Asia, which led to a hunt by companies for a cheaper production base. With
the opening of Communist economies such as China and Vietnam to foreign
investment, Malaysia faced greater competition for the available capital,
which forced its economy to be more efficient and competitive while limiting
assistance from the government. This Doi Moi and liberalization concept also
permitted greater regional trading, especially in the oil markets industry.
Stafford (1997) believes that the desire to take advantage of global opportunities and the need for greater operating efficiency also led the government
to take a more liberal approach in supporting Malaysias own companies, both
at home and abroad. The countrys small domestic market necessitates
international competition in order to survive. The implementation of the
Asean Free Trade Area (AFTA) in the 1990s further increased the need for a
robust economy able to compete regionally. In response to the dynamism of
the regional economy, the government took a more ethnically neutral stance
in supporting Malaysian companies overseas and locally by relaxing the
Industrial Coordination Act. Owing to the need for local companies to be
regionally competitive the government, despite its continuation and support
of Bumiputera businesses and entrepreneurs, has been forced to alter its
NEP-era views to meet the challenges of a more open economy.

Malaysias New Economic Policy 171

Has the NEP failed?


The NEP, and its successor, the NDP, were tools utilized as a response to the
racial tensions and economic disparity that were prevalent at the end of the
1960s. As a vision it was a structured plan to resolve the main overriding social
tensions while at the same time taking care of the economys needs, preparing
the nation for its race in a competitive global economy. On the whole, the
agenda was carried out beyond its main two prongs, encompassing human
resource development (HRD), privatization policies, public sector financing,
regional development, industrial development, agricultural growth, energy,
tourism and science and technology policies, among others. But the emotional
and philosophical maturity of a country is something that cannot be easily
quantified, much less planned at a national level. It is a by-product of all the
structured policies that have been planned, yet plays an important role in
determining the direction in which the country is heading.
In the current global economic slowdown, Malaysia is facing a critical time;
it is virtually impossible to have strong economic growth, particularly in a
country which is at a developing stage, without strong political backing and
support. The two issues are strongly bound together and Malaysia has not
been spared external pressures. The 1998 dismissal of then Deputy Prime
Minister Anwar Ibrahim sparked significant social unrest, resulting in the
formation of new Opposition party which gained the biggest support ever in
Malaysian history for a non-ruling political group. This, together with several
major failures of companies that have a reputation of being given political
favor by the Government, led to a loss of confidence in and credibility of the
Mahathir government. The government buy-out of Malaysia Airlines in 2001
and the subsequent collapse of Renong, companies which were managed
by NEP baby-boomers, demonstrated the fundamental weaknesses still
prevalent in the system.
Political freedom and freedom of speech, the two basic tenets of democracy,
still exist in only limited form. With the Government practicing a paternal
controlled democracy, it will be a long time before Malaysia can fully
mature and embark upon the life cycle of social development not unlike a
rowdy teenager evolving into a mature adult, going through a period of
criticism, making some necessary mistakes and eventually aware and acute
enough to acquire social maturity. Not all governments which permit such
freedom produce a more coherent and mature population, but perhaps create
one that is more perceptive, which is one of the unmeasurable qualities of the
human development index (HDI).
The growth plan of a country as diverse and fragile as Malaysia should be
two-pronged economic as well as social. Social policies should go beyond the
obvious issues already covered in Malaysian Plans they should also cover the
freedom of the people to voice their views and make their own decisions.
Malaysia is a country that is liberal by Asian standards, but it expects to be fully
economically developed and as competitive as First World countries, while
not allowing the population to ripen and evolve to adjust to economic

172 Faridah Jamaludin


liberalization. As illustrated earlier, there is already a dichotomy between
local- and foreign-educated students. Apart from the typical brain drain
prevalent in many developing countries, many are frustrated at their inability
to practice the basic tenets of freedom such as media freedom, freedom of
speech, and the right to assemble. Not able to indulge in their own beliefs and
thinking, they have little choice but to borrow from others, and there are a lot
of examples to follow, not all of which are healthy. Foreign influences abound
and the MTV culture is typified in the younger generation, many of whom
are unaware of how the NEP has affected their lives, knowing just that they are
wealthier than their parents were. They are more content materially, they eat
better, live longer and are better educated, but they do not have any more
political freedom than their fathers did, nor any more original thoughts. These
factors result in a schizophrenic society which has one foot in an economically
developed county and the other stuck in trepidation in a political backwater.
There is no doubt that Malaysia provides a case study of a Third World
country which is faced with the stark issues of how far progress can be denied if
the country is to be given any chance of reaching the much-sought-after status
of a developed nation. There is a lot to learn about how such a multi-ethnic
society can manage to live together in harmony and little, if any, bloodshed.
While the people are no longer hungry, fewer are living in poverty, fewer are
illiterate and most live longer, there is a danger of too high a dependence
being placed on the Government to determine economic and market forces,
thus hampering Malaysias chances of competing on the international front.
The private sector, required to be competitive, is always the best representative in the global market, for it can generate enough funds and profit for new
investments, R&D, and growth, money that the Government should be
required to spend on public amenities such as health and utilities. Prolonged
support of private bodies inevitably leads to a misallocation of resources as
well as complacency on the part of the private sector as it is being upheld not by
market competitiveness but by a life support machine; this is the key aspect
which needs to be addressed and rectified.
The criteria for judging the NEPs success rate have to be clearly defined.
The second prong has obviously been achieved. The first, however, has backfired. Given the current trepidation felt on the global economic front and the
buy out and collapse of two major Bumiputera companies, it is becoming more
difficult for the government to remove this support without defeating its first
NEP objective a more equitable redistribution of income. With a lower
percentage of Bumiputera ownership in the countrys corporate wealth, will the
issue of income disparity again repeat itself? Will there be another May 13?
It is important to note that the objective of the NEP was to create an overall
improvement in income distribution, not just for the select few. The 1998
Asian Financial Crisis was an impetus for a series of shake ups that sifted the
able from the weak, the self-reliant from the dependent. The Bumiputera
community cannot deny that it has not been given a chance to compete against
the Chinese, yet it cannot claim that it has utilized this opportunity with the

Malaysias New Economic Policy 173


wisest of decisions. The NEP is still an ongoing process whose success rate can
be determined only in the future. The 2020 Vision sounds good on paper, but
Malaysia is still a long way from reaching the maturity levels so beautifully
expressed in the countrys wish-list of long-term desires.

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Index
Abella, R.S. 43
Abella Report, The 43
Aboriginal and Torres Strait Islander Social Justice
Commission (Australia) 71, 73, 79, 88n.4, 88n.5,
88n.7
aboriginals 10, 367, 40, 41, 43, 44, 45, 7089
aborigines see aboriginals
ABSTUDY 71
Actual Situation of Life Study (Japan) 135
Adivasis see scheduled tribes; tribals
affirmative action 2, 53, 57, 65, 7980, 81, 85, 86,
88n.8, 88n.10, 88n.15, 96, 106, 112, 123, 124n.3,
16970
Africa 4, 78
African Americans 5367, 144, 148; see also blacks
Afro-Brazilians 9, 1425; see also blacks
Afro-Canadians 3840; see also blacks
Agricultural Bank of Malaysia 156
agriculture 113, 1523, 170
Akerlof, G.A. 11517, 125n.6
alcoholism 71
A Levels 102, 106
Ali Baba businesses 168
Altman, J.C. 76, 77
Amanah Saham Nasional (National Share
Ownership Trust) (Malaysia) 156
Ambedkar, B.R. 6, 7
amerelos 17
Americas 4
Anderson, B. 65
Andrews, G.R. 25n.3
Ang, I. 96
anti-discrimination laws 56
apartheid 72
Arajo Costa, T.C.N. 15
Armed Forces Qualifications Test (AFQT) 54,
556, 656
Armed Forces Vocational Aptitude Test (ASVAB)
55
Armentrout, K.S. 56
ArrowDebreu model 115
Arthur, W.S. 77
artisans 131
ASEAN Free Trade Area 170
Asian financial crisis 171
Asians 82, 86
Ati-Sudras see Dalits
atrocities 1223
Australia 1, 3, 10, 7089
Australasia 148
Australian Bureau of Statistics 71, 72, 767, 78,
86n.2
Australian Parliament 88n.12
Ayrans 67, 124
Baer, W. 15
Baha (Brazil) 1525
Baker, M. 40, 48n.3
Balkan crisis 1

Banerjee, B. 1212, 126n.17


Bank Bumiputera (Malaysia) 156
Bank Pembangunan (Malaysia) 156
Bardhan, P.K. 124n.4
Beaujot, R.P. 48n.1
Becker, G.A. 115, 125n.6
Belize 1, 3
Benjamin, A. 40
Beppu Oita Prefecture (Japan) 137
Bhakti movement 117
Bhattarcharjee, D. 121
Black, D.A. 68n.2
Black Power 53
blacks 2, 10, 1425, 3840, 5267, 86, 144, 148
Blinder-Oaxaca decomposition 223, 25n.6, 3548
Borjas, G. 612
Borland, J. 58
Bound, J. 58
Bourke C. 71
Brahmins 78, 114, 120, 1256n.15
Bratsberg, B. 57
Brazil 9, 1425, 101, 106, 125n.14
Brazilian Demographic Censuses 1725
Breslaw, J.A. 48n.5
Breton, R. 37, 38, 48n.6
British Canadians 2748
British colonization 1523
Bucci, G.A. 122
Buddhism 1312, 138
bumiputera see Malays, native (Malaysia)
Bumiputera Commercial and Industrial
Community 1614
buraku hunts 1379
Buraku Liberation League 11, 130, 1334, 137,
13842, 1467, 148, 148n.1, 148n.8, 14950n.17,
150n.19
buraku liberation movement 11, 130, 1334, 13842
Buraku Liberation News 142, 1467
buraku lists 1378, 145, 149n.4, 149n.6, 149n.12,
14950n.17
burakumin 5, 11, 13050
Burden, J. 71
Burundi 2, 5
Bush, G.W. 85
Byrne, B. 17
Cacon, N. 37
Canada 1, 3, 4, 910, 2748
Canadian censuses 2835
cancer 71
capitalism 120
Captain Cook 72
Carvalho, J.A. 14, 15
casinos 74
caste 2, 3, 59, 10, 11226, 131
caste inequality see caste
Caucasian type 8
Central Provident Fund 98
Chamars 113

176

Index

Chambers, R. 124n.4
Chanra, V.P. 121
Chaterjee, P. 124n.2
Chaubisa, M.L. 1223
Chaubun, S.N. 120
Chaykowski, R.P. 48n.3
Chicago School 115, 125n.6
China 147, 170
Chinese Canadians 3842
Chinese Development Assistance Council
(Singapore) 99, 107, 1089n.19
Chinese Malaysians 11, 152173
Chinese Singaporeans 94110
Chitnis, S. 123
Chopra, P. 123
Christianity 2
Christofides, L. 48n.6
Civil Rights Act of 1965 (USA) 53, 80
Civil War (USA) 80
class stratification 634, 77, 101, 1045, 166,
168n.10
Clinton, W.J. 79, 80, 85
coal mining 146
coffee production 15, 24n.2
cognitive skills 10, 53, 55, 567
color 34, 59, 1425, 2835
commerce and industry 153, 156, 169
Commonwealth of Australia 77, 79, 80, 82, 84, 86,
88n.9
communal conflict 154
Communist Party (Japan) 133, 140
commuting distance 63, 64
Companano, M. 15
compensating differentials 11920
compensation see reparations
compensatory discrimination 96
Conerly, W. 88n.18
conjunctivitis 71
Consorte, J.17
Constitution (India) 11213
Constitution (Malaysia) 153, 154
consumption 122, 123
credit discrimination 1201
Croatia 1
crony capitalism 168
Croson decision (USA) 88n.11
culture 56, 624, 95, 97, 1012
Currie, J. 55
Cutler, D.M. 64
Dalits 6, 8, 11314, 118, 119, 124n.1, 124n.3, 148
Daly, A.E. 745, 767, 86
Darity, W. Jr. 1, 17, 523, 56, 623, 65, 66, 67, 68n.1,
68n.6, 78, 123, 124, 125n.13
Darwin (Australia) 72, 86
Dasas 7
Dearborn (USA) 64
decomposition see Blinder-Oaxaca decomposition
Degler, C. 24n.3
Delhi (India) 121
democracy 171
denunciation processes 133, 13942, 148, 149n.12
Department of Education, Training and Youth
Affairs (Australia) 71
Department of Statistics (Singapore) 103, 107n.2,
107n.3, 107n.4, 107n.5, 107n.6, 108n.8, 110n.32,
110n.34
Deshpande, A. 1, 10, 67, 111, 113, 117, 123, 125n.12

De Silva, A. 37, 39
Dhesi, A. 121, 126
diabetes 71
Diet, The (Japan) 143
Dietrich, J. 623, 66
disabled, the 4
discrimination 133, 1379, 141, 1425, 168, 169;
statistical evidence 23, 4, 910, 1425, 3546,
52, 64, 1218; theories of 11517, 118
District Court of Osaka (Japan) 141
District Court of Takamatsu (Japan) 137
Dobson, M. 723, 88n.7
Doi Moi 170
Donoghue, J.D. 130, 133
Dougherty, C. 39
dowa districts 134, 135, 142, 144, 146, 148, 149n.4,
14950n.17
Dravidians 124
Driedger, L. 48n.1
Dumont, L. 120, 124n.2
East Indian Malaysians 1534, 15760, 1636
East Indian Singaporeans 94110
economic growth 2, 15, 94
education see schooling
Emancipation Edict (Japan) 133, 146, 148
Employment Equity Act of 1986 (Canada) 4, 345
Equal Employment Opportunity Commission
(USA) 145
equal opportunity 934, 967
equity restructuring 1556, 15864, 167, 1723
Eritrea 1, 3
eta 130, 131, 137, 138, 146, 148
Ethiopia 1, 3, 4
ethnic capital 612
ethnic conflict 1656
ethnicity 4, 2748
eugenics 108n.9
Eurasian Association (Singapore) 99
Eurasians (Singapore) 947
Euro-Australians 72
Euro-Brazilians 9, 1425
eurocentricism 75
Europe 4, 72
Europeans 148
exchange rates 170
exclusion 623
fair equal opportunity 934, 967, 103
Fairlie, R.W. 58
family effects 56, 634, 66
farmers 131
Feagin, C. 78
Feagin, J. 78, 88n.8, 88n.10, 88n.15
Federal Agricultural Marketing Authority 156
Federation of Malaya 108n.14
feudalism 120
Fifth Malaysia Plan 167
fishing 153
Fodor, E. 10
Fourteenth Amendment (USA) 80
Fourth Malaysia Plan 167
France 78
free rider problem 117
French Canadians 2748
Gaiha, R. 124n.4
Galanter, M. 123

Index 177
Gandhi, M.K. 116
Gangopadhyay, S. 124n.4
gays see homosexuals
Gebara, A. 25n.2
Gender Development Index 1
Gender Empowerment Measure 1
gender inequality 12, 1719, 25n.5, 38, 445, 723
General Social Survey (USA) 612
genetic explanations for intergroup inequality
534, 95, 1034, 108n.9, 1323
geographic variations 8, 1425, 111
George, P. 36
Germany 78
ghettos 134, 138, 145
Ghurye, G.S. 8
Gingrich, N. 85, 88n.18
Gini coefficients 94, 107n.6, 1589, 168
Glaeser, E. 64
Glazer, N. 150n.8
Goldsmith, A. 63
Graham, D.H. 14, 16, 25n.2
Gray, A. 89
Great Depression, The 27
Green, A.G. 48n.1
Green, D.A. 48n.1
Gregory, R.G. 745
Groemenr, G. 131
Grogger, J. 64
Guilkey, D. 623, 66
Gujarat (India) 122
Gunderson, M. 48n.4
Gupata, D. 124n.2
Haessal, W. 42
Harado, T. 149n.8
hard core minorities 123, 130, 148, 149n.2
Harris, L. 88n.10
Harris, M. 17
Harrod-Domar model 155
Hashim, M. 165
Hawke, A.E. 767
health outcomes 71, 136
Heckman, J. 53
hepatitis 71
Herrnstein, R. 53, 54
High Court (Australia) 84, 88n.7
High Court (Osaka, Japan) 141
Hill, M. 108n.10,108n.12, 109n.20, 109n.22
Hinduism 2, 3, 5, 95, 111, 117, 122, 123n.1
Hing, A.Y. 168
hinin 1302, 146, 148
Hinks, T. 10
Hoff, K. 115, 125n.6
Holzer, H. 58
homosexuals 85, 88n.17
hookworm 71
Horatio Alger story 120
Housing and Development Board (Singapore)
1001, 106, 109n.20, 109n.21, 109n.23, 109n.24,
109n.25, 109n.26, 109n.27
Howland, J. 42
Hum, D. 38, 48n.5
human capital 602, 121, 1646
Human Development Index 1
Hunter, B. 75, 767
Hutus 2
Ibrahim, A. 171

identity 1517, 345, 96, 11517, 134, 1457


Imani, N. 78
immigration 25n.2, 2734, 86, 94, 96, 106n.7, 122,
153, 1656
Immigration Act of 1953 (Canada) 27
Immigration Act of 1967 (Canada) 28
Immigration Act of 1978 (Canada) 28
imperfect information 115, 122
imprisonment 71
income distribution 94, 155, 1589, 168
income inequality 1, 712, 94, 1045, 1223, 136,
155, 158, 168
Independence (India) 112, 120
Independence (Malaysia) 153
index of dissimilarity 25n.5
India 1, 3, 59, 10, 78, 101, 112126
Indian Malaysians 154, 15960, 165
indigenous peoples 9, 10, 17, 25n.4, 367, 40, 41,
434, 45, 7089, 148, 15273
Indigenous Trust Council see Majlis Amanah
Rakyat
Industrial Coordination Act of 1975 (Malaysia) 167,
170
industrialization 15, 125n.14, 133, 157
infant industry 169, 170
infant mortality 71
integration 101, 109n.26, 109n.27, 1467
intelligence and race 53, 57
inter-generational mobility 612, 68n.3
inter-group inequality 1922, 3548, 5267, 715,
945, 1045, 111, 114, 1349, 144, 1524,
15864, 167
inter-marriage 137, 1457, 150n.18
Ireland 78
Islam 2, 5, 978
Israel 1, 3, 4
Jain, M.K. 1223
Jajmani matrix 11819
Jajmani system 119, 125n.9
Jakarta (Indonesia) 94
Jamaludin, F. 11
Japan 1, 3, 5, 11, 13050, 170
Japan Government Somucho 135, 144, 146,
14950n.17
Japanese Koreans 147, 150n.19
Jatabs 121
jatis 79, 114
Jayamaran, R. 121, 1245n.5
Jayaraj, D. 122, 123
Jim Crow 623
job tenure 578
Junankar, P.N. 77, 86
juvenile justice system 71
Kain, J.F. 64
Kalbach, W.E. 48n.1
Kanbis 122
Karnataka (India) 123
kawata see eta
Kenya 122
Kerala 8
Kidd, M. 48n.3
Kinta 153
Kirasawa, Y. 130, 131, 134, 143, 149n.14
Kitaguchi, K. 138
Klass, M. 7, 8
Knight, J.B. 1212, 126n. 17

178

Index

Koreans see Japanese Koreans


Kosambi, D.D. 7
koseki records 138, 149n.7
Kowarick, L. 15
Kranton, R. 116
Krishnan, P.S. 1223
Kshatriyas 7, 114
Kuala Lumpur (Malaysia) 1545
Kuhn, P. 36, 37
Kuo, C.Y. 36
Kuran, T. 117
Kush, J. 42
kyadan toso see denunciation processes
Kyoto (Japan) 146
Kyriazis, No. 9, 42
labor force participation rates 72, 107n.6
Labor Standards Act of 1947 (Japan) 149n.9
Lai, A.E. 108n.12, 109n.27
Lakshmanasamy, T. 122
Lal, D. 117, 125n.6
Land, J. 17
landlessness 119, 123n.1, 131
land ownership 72, 88n.7, 119, 121
land reform 119, 125n.12
Lanjouw, P. 1201, 1245n.5, 125n.10
Larat 153
Latinos 58
leatherworkers 1312, 138
Lee, K.Y. 95, 102
Leonard, J. 65
Levelers Society see Shuheisha
Levy, F. 55
Li, T. 106, 108n.10, 108n.13
Lian, K.F. 108n.10, 109n.20, 109n.22
liberalization 170
Life Style Research Survey (Japan) 146
linguistic variation 5, 336, 101, 105, 107n.1, 107n.2
List, F. 169
Look East policy 1567
Loury, G.C. 53, 130
Lovell, P. 9, 125n.14
low status minorities see hard core minorities
Lui, J. 767, 86
McKeever, M. 10
Mackenzie District (Canada) 36
McLauchlin, A. 135, 148n.1
McVay, W.A. 49n.1
Madhaswaran, S. 5, 122
Mahathir, M. 1567, 161, 167, 171
Majlis Amanah Rakyat 164, 165
Maki, D. 48n.5
Malays, native: (Malaysia) 11, 152173; (Singapore)
94110
Malaysia 1, 2, 3, 4, 11, 15273
Malaysia Airlines 171
Malaysian Chinese Association 154
Malaysian Indian Congress 154
Manadarin 105
Marathi 124n.5
Masayuki, T. 141
Mason, P. 10, 52, 56, 63, 64, 65, 68, 68n.1, 68n.6
Mayes, A. 11213
Mayoux, L. 1201
Mead, L. 52, 55
Meerman, J. 5, 111, 123, 131, 147, 149n.2
Mehmet, D. 166

Meiji regime 133


Mencher, J. 112, 124n.1
Mendaki 979, 1067, 108n.15, 108n.17, 1089n.19
Menteri Besar Incorporated 167
merchants 131
meritocracy 20, 612, 93110, 166
middle classes 3, 146
Middle East 78
migration 122, 146
military 85
Miller, P.W. 48n.4
Milne, R.S. 152
Ministry of Finance (Malaysia) 167
Ministry of Justice (Japan) 137, 138
minorities 2, 4, 2848, 123, 130, 168
Mishra, G.P. 122
Mohan, R. 124n.4
Mongoloid type 8
Montonori, T. 150n.20
Moore, R.D.Q. 10
Moore, S. 71
mulatto escape hatch 25n.3
mulattos 1425
multiculturalism 345
multiethnic society 152
multiracial meritocracy 10, 93110
Murnane, R. 55
Murray, C. 53, 54, 55
Myers, S.L. Jr. 10, 65, 75, 76, 78, 88n.10, 88n.15,
125n.13
Nafziger, E.W. 120
National Census of 18723 (Japan) 149n.6
National Committee for Buraku Liberation 133
National Corporation (Malaysia) see PERNAS
National Development Plan (Malaysia) 1604, 166,
167, 169, 170, 171
National Equity Corporation (Malaysia) see PNB
National Front (Malaysia) 154
nationalism 96
National Longitudinal Survey of Youth (USA) 54,
58, 61
National Sample Survey (India) 122
National Share Ownership Trust see Amanah
Saham Nasional
native Americans 2, 725, 85
Nayak, V. 13
Neary, I. 133, 141, 142, 144
Negroid type 8
neighborhood effects 612, 66, 106
Nembhard, J. 1
neoclassical economics 756, 115
Nepal 3
Nesiah, D. 133
new common citizens 133
New Economic Policy (Malaysia) 11, 15273
New South Wales (Australia) 73, 88n.4
New Zealand 1, 3
Ng, S.K. 166
N Levels 102
nonracial democracy 88n.14
North Africa 78
North America 4
Northern Territory (Australia) 73, 88n.4
Oaxaca, R. 43
occupational status 1922, 623, 113, 120, 131, 132,
136, 1524

Index 179
occupations, degraded 11319, 1314
Oettinger, G.S. 58
Office of Federal Contract Compliance (USA) 65
Okano, K. 150n.20
O Levels 1023, 166
Oliveira, L.E.G. 15
Osaka (Japan) 136, 137, 143, 149n.13, 149n.15
Osmani-Rani, H. 168
Otake, E. 140
Outline Perspective Plan (Malaysia) 155
Outline Perpective Plan 2 (Malaysia) 161
Pacific War 133
Palanpur (India) 1245n.5, 125n.10
Pan, I. 123
Panandakar, P. 123
pardos 1525
passing 2, 1458
Pathucheary, M. 168
Patidars 121
Patrinos, H.A. 36
patron-client relationship 119, 125n.11
Pendakur, K. 41, 48n.6
Pendaukur, R. 41, 48n.6
Perak (Malaysia) 153
PERNAS 156
Perwaja 157
Petterson, S.M. 52
phenotype 2, 4, 59
physical anthropology 59
Piore, M. 75
planning 115, 1545, 1712
Platteau, JPh. 119, 125n.11
Plaza Accords 170
PNB 156
Podberesky decision (USA) 88n.11
polytechnics 104
population growth 72, 118, 132
Poracaro, R.M. 15
poverty 735, 1245n.5, 1346, 154, 155, 156, 1578,
1612, 166, 167
Prairies, The 27
Prasad, S. 123
prejudice 11617, 139
premarket factors 36, 537, 79, 121
pretos 1525
Primary School Leaving Exam (Singapore) 1023,
1067, 110n.31
privatization 167, 171
proletarianization 124n.1
Proton 157
purchasing power parity 144, 149n.16
Queensland (Australia) 73, 88n.4
quotas 88n.8, 88n.10, 1645, 1689
race 59, 910, 1425, 667, 7180, 94110, 15273;
coefficient technique 54; riots 108n.2
Race Reconciliation Council (Australia) 85
racial conflict see ethnic conflict
racial democracy 8, 14
racial inequality see inter-group inequality
racial theory of caste 69
racism 6, 56, 7580, 125n.13
Ransom, M.R. 43
Rao, V. 11920
Razak, T.A. 1556
reconciliation process 2, 7089

regional variation see geographic variations


Reitz, J.G. 37, 38
religion 2, 4, 111
remedies for inter-group inequality 3, 10, 789,
96101
Renong 171
reparations 814, 86, 1445
reservations (India) 118
reservation wages 58
rice production 153
Risley, H.H. 8
Rodgers, W. 55, 56, 65
Rohlen, T.P. 140
Roosevelt, T. 24n.1
Rose, D.B. 88n.5
Rubber Industry Smallholders Development
Authority (Malaysia) 156
rubber production 153, 156
Rwanda 1, 2, 3, 4, 5
Sabol, W. 76
Saggar, M. 123
Sakellarious, C.N. 36, 42
Salmond, A. 70
samurai 131
Sanders, W. 77
sanskritization 121, 1256n.15
So Paolo 1525
scheduled castes 11415, 120, 1212, 123, 124n.3
scheduled tribes 114, 122, 123, 124n.3
schooling 1719, 52, 5364, 71, 97, 1017, 108n.17,
108n.18, 1089n.19, 133, 1346, 1424, 145,
149n.7, 149n.12, 149n.14, 150n.20, 1646
Scoville, J.A. 11718, 199, 125n.10
Sealord purchase see Treaty of Waitangi
second best, doctrine of 125n.8
Second Malaysia Plan 154, 155, 1645
segregation 5, 11, 614, 1001, 118, 130, 131, 133,
134, 138
self-help 969, 1067, 108n.14, 139
Selvaratnam, V. 166
Seventh Malaysia Plan 1634
Shannon, M. 48n.4
Shantakumar, P. 110n.32
Shapiro, B.M. 42, 48n.3, 48n.6, 48n.7
Sharma, S.S. 122
Sharp, N. 88n.6
Shinto period 1312
Shogunate 130, 132
Shuheisha 133
Sikes, M.P. 78
Sikhism 117
Silva, N. 17, 25n.3
Singapore 1, 4, 10, 93110
Singaporean censuses 94, 108n.8
Singapore Indian Development Association 99,
108n.18, 1089n.19
Singapore Institute of Management 104
Singh, H. 121, 126n.16
Sixth Malaysia Plan 1612
Skrentny, J.D. 16970
Smith, D.E. 77
smoking 71
social capital 602
Socialist Party (Japan) 133
social mobility 1203, 132, 1458
social stratification 934, 95, 103, 124n.2, 1524
Somucho see Japan Government Somucho

180

Index

South Africa 2, 3, 10, 88n.14


South African Truth and Reconciliation
Commission 80
South America 4
South Asians 3842, 78
South Pacific Islanders 82
Sowell, T. 174
Special Assistance Plan (Singapore) 104, 105
Special Measures Laws (Japan) 133, 1426, 148,
150n.17
Spriggs, W. 55, 65
Sri Lanka 4
Srinivas, M.N. 1256n.16
Srinivasan, T.N. 124
Stafford, G. 170
stagflation 65
State Secretary Incorporated (Malaysia) 167
statistical theory of discrimination 58, 11517,
122
steel 157
Stelcner, M. 4, 9, 42, 43, 48n.3, 48n.6, 48n.7
stereotypes 95, 106
Stern, N. 1201, 1245n.5, 125n.10
Stewart, J. 68n.6
St. Jean, Y. 78
stolen children 824, 87
Storm, K. 70
Stratton, J. 96
Stratton, L. 58
Student Service Centers (Singapore) 1089n.19
Subramanian, S. 122, 123, 124n.4
subsidies 1425
subsidized housing 97, 99101, 106, 109n.21,
109n.23, 109n.24, 109n.25
Sudras 114
Suhaini, A. 169
Su-Lan Reber, E. 134, 136, 137, 138, 145, 149n.5
Sundstrom, W.A. 58
Sweetman, A. 37
Swidinsky, R. 39, 48n.6
Tamils 106, 108n.11, 108n.13
Tamney, J.B. 95, 108n.9, 108n.13
Taylor, J. 767, 86, 89
Tendulkar, S. 124n.4
Terrell, D. 57
test scores 547, 1023, 109n.28, 110n.31, 166
Third Malaysia Plan 155
Thomas, D. 55
Thorat, S.K. 122
Thottan, P. 124n.4
tin production 1534
Todaro, M.P. 154
Tokugawa period 1313, 138
Tomonaga, K. 136
Torres Strait Islanders 7089
trachoma 71
transaction costs 115
Trautman, T.R. 6, 8
Treaty of Waitangi Settlement Act of 1992 88n.13
Tremawan, C. 108n.10, 109n.27, 110n.29, 110n.30
tribals 124n.3
Trinidad and Tobago 1, 3
Truman, H.S. 168
trusteeship 156
Tuition Loan Fund 105
Tutsis 2

Twine, F. 9
unemployment rates 58, 723, 153
Ungku, A.A. 166
United Malays National Organisation (Malaysia)
154
United Nations Development Program 9
United States of America 2, 3, 10, 5267, 70, 779,
81, 101, 106, 107, 119, 125n.13, 144, 145, 16970
Universities and Universities College Act of 1971
(Malaysia) 164
university education 1035, 1345, 1645
University of California system 88n.18
University of Fine Arts (Japan) 137
University of Malaya 164
University of South Australia 71
unobserved heterogeneity 36, 55, 56
untouchables see Dalits
Upham, F.K. 133, 134, 138, 139, 141, 1423, 145,
149n.12
urbanization 73, 167
urbanrural dichotomy 1578
US Civil Rights Commission (USA) 70
Uttar Pradesh 8, 120
Vaidyanathan, A. 124n.4
Vaillancourt, F. 48n.6
Vaisyas 7, 114, 120
varnas 69, 114
Vasil, R.K. 108n.11
Vedic texts 6
Vera, H. 78
Veum, J. 56, 63
Vietnam 170
violence 108n.12, 154
Viscusi, W.K. 75
visible minorities 4, 2835
Vision 2020 161, 172
Wannell, T. 37
war 1
WASPS 78
wealth 66, 104, 155, 156, 1589, 1604, 1723;
redistribution 155, 156, 1589, 1604, 167,
1723
welfare payments 134, 135
Western Europe 4
white privilege 10, 5864, 7580
whites 4, 10, 1525, 2848, 5267, 7586, 170
Wik decision (Australia) 78, 88n.6
Willett, J.B. 55
Winter, W. 85
Wood, C.H. 14, 15, 17
World Bank 1245n.5, 144
World War II 27, 82
Yadava, R.C. 120
Yasuda, N. 167
Yata Middle School (Japan) 141, 149n.12
Yip, Y.H. 166
Yoku High School (Japan) 140
Young, M.L. 166
Zax, J.S. 64
Zendoyko 149n.14
Zimbabwe 1, 3
Zulus 78