The Indigenous—White Earnings Gap and Labour Market Discrimination in Canada

Abstract

Indigenous people represent four percent of the total population in Canada and are the youngest and fastest growing minority population in the country. Colonialism left Indigenous people disadvantaged in terms of education, health and labour market outcomes relative to the majority population in Canada today. This study looks at the relationship between self-reported labour market discrimination and the annual earnings gap between the Indigenous and white populations as of 2013 using Cycle 28 of the General Social Survey on Victimization in Canada. By employing the Oaxaca (1973) decomposition method, I find between 44.2 and 49.2 percent of the men’s Indigenous–white annual earnings gap can be explained by observable characteristics and 50.8 and 55.8 percent of the gap is unexplained. For women, 32.2 percent of the gap cannot be explained when secondary variables such as employment type and disability status are included in that analysis, yet 86.3 percent is unexplained when only education, work experience and geography are observed. Lastly, I utilize a nuanced approach to analyzing the Indigenous–white earnings gap. I find a higher proportion of men reported labour market discrimination who have higher predicted earnings than their actual using human capital coefficients from the white group’s earnings regression to predict Indigenous men’s earnings.