Estimating the Potential Impact of Combined Race and Ethnicity Reporting on Long-Term Earnings Statistics

TL;DR

This study examines how changes in race and ethnicity reporting formats could impact the accuracy of long-term earnings statistics, especially for foreign-born populations and their US-born children, highlighting potential detection challenges.

Contribution

It analyzes the effects of transitioning from a two-question to a single-question race and ethnicity reporting format on long-term earnings data for diverse immigrant groups.

Findings

Significant heterogeneity in earnings by country of birth and ethnicity.

Some earnings differentials may become harder to detect with new reporting formats.

Implications for accurate long-term earnings analysis for immigrant populations.

Abstract

We use place of birth information from the Social Security Administration linked to earnings data from the Longitudinal Employer-Household Dynamics Program and detailed race and ethnicity data from the 2010 Census to study how long-term earnings differentials vary by place of birth for different self-identified race and ethnicity categories. We focus on foreign-born persons from countries that are heavily Hispanic and from countries in the Middle East and North Africa (MENA). We find substantial heterogeneity of long-term earnings differentials within country of birth, some of which will be difficult to detect when the reporting format changes from the current two-question version to the new single-question version because they depend on self-identifications that place the individual in two distinct categories within the single-question format, specifically, Hispanic and White or Black, and MENA and White or Black. We also study the USA-born children of these same immigrants. Long-term earnings differences for the 2nd generation also vary as a function of self-identified ethnicity and race in ways that changing to the single-question format could affect.