Abstract/Summary

In many developed countries racial and ethnic minorities are paid on average less than the white majority. While racial wage differentials are partly due to immigration, they also exist for racial minorities of second or further generation. Eliminating racial wage differentials and promoting equal opportunities among citizens with different racial backgrounds is an important social policy goal. Inequalities resulting from differences in opportunities lead to a waste of talent for those who cannot reach their potential and to a waste of resources if some people cannot contribute fully to society.