Boundaries of Clan and Color

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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 encompassemployment, wage, occupational status and wealth differentials. Virtuallyevery nation includes a group whose material well-being is sharply depressed incomparison with another, socially dominant, group.

This collection is a cross-national, comparative investigation of the patternsand dynamics of inter-group economic inequality. A wide range of respectedexperts 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 thiscollection forms an important book that will be of interest to students andacademics involved in racial studies, the economics of discrimination andlabor economics as well as being very useful to policy makers the world over.

William Darity, Jr. is Cary C. Boshamer Professor of Economics and Directorof the Institute of African American Research at the University of NorthCarolina at Chapel Hill as well as Research Professor of Public Policy Studiesat Duke University.

Ashwini Deshpande is Assistant Professor of Economics at the Delhi Schoolof Economics, University of Delhi.



This series presents new advances and developments in social economics thinking ona variety of subjects that concern the link between social values and economics. Need,

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Boundaries of Clan and Color

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

Advances in Social Economics

Edited by John B. Davis Marquette University



Boundaries of Clan and ColorTransnational comparisons of

inter-group disparity

Edited by

William Darity, Jr. and Ashwini Deshpande



First published 2003by Routledge

11 New Fetter Lane, London EC4P 4EE

Simultaneously published in the USA and Canadaby Routledge

29 West 35th Street, New York, NY 10001

Routledge is an imprint of the Taylor & Francis Group

© 2003 editorial matter and selection William Darity, Jr. and AshwiniDeshpande; individual chapters, the contributors

All rights reserved. No part of this book may be reprinted or reproduced orutilised in any form or by any electronic, mechanical, or other means, nowknown or hereafter invented, including photocopying and recording, or inany 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 DataBoundaries 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 distribution–Case studies. 2. Equality–Economic aspects–Case studies. 3.

Ethnic groups–Economic conditions–Case studies. 4. Race–Economic aspects–Casestudies. I. Darity, William A., 1953– II. Deshpande, Ashwini, 1965– III. Series.

HC79 .I5B665 2003331.6–dc21 2002037066

ISBN 0-415-27395-1

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

This edition published in the Taylor and Francis e-Library, 2005.

“To purchase your own copy of this or any of Taylor & Francis or Routledge’s

collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”

(Print Edition)

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



Contents

List of illustrations vii

Notes on contributors ix Acknowledgments xi

1 Boundaries of clan and color: an introduction 1

ASHWINI DESHPANDE AND WILLIAM DARITY, JR.

2 Race, gender and regional labor market inequalities in

Brazil 14

PEGGY A. LOVELL

3 Earnings differentials among ethnic groups in Canada:

a review of the research 27

MORTON A. STELCNER

4 Understanding recent empirical evidence on race and labor

market outcomes in the USA 52

PATRICK L. MASON

5 If not reconciliation, then what? Race and the “stolen

generation” in Australia 70

SAMUEL L. MYERS, JR.

6 Multiracialism and meritocracy: Singapore’s approach to

race and inequality 93

R. QUINN MOORE

7 Recasting economic inequality 112

ASHWINI DESHPANDE



vi Contents

8 The mobility of Japan’s Burakumin: militant advocacy and

government response 130

JACOB MEERMAN

9 Malaysia’s New Economic Policy: has it been a success? 152FARIDAH JAMALUDIN

Index 175



Illustrations

Figures

5.1 Aboriginal and Torres Strait Islander population in Australia,1971–96 73

5.2 Percentage of Australians unemployed, aged 15 and over,1971–91 74

5.3 Percentage of Australians not in the labor force, aged 15and over, 1971–91 75

5.4 Ratio of Aboriginal to total percentage unemployed, 1971–91 765.5 Indigenous to non-Indigenous income ratios, 1980 and 1990 765.6 Indigenous to non-Indigenous income ratios, Northern

Territory, 1991 and 1996 775.7 Is acknowledgment of prior wrongs a necessary condition for

reconciliation? 815.8 Is an official apology required for reconciliation? 825.9 Is compensation for prior wrongs required for reconciliation? 82

Tables

1.1 Ranking of countries by selected indicators, 2000 32.1 Regional distribution of the population by race, Brazil, 1890–1991 162.2 Selected indicators by color and sex, workers aged 18–64, urban

São Paulo and Bahía, 1991 182.3 Occupational distribution by color and sex, workers aged

18–64, urban São Paulo and Bahía, 1991 192.4 Average monthly wage by color and sex, workers aged 18–64,

urban São Paulo and Bahía, 1991 202.5 Average monthly wage by years of completed schooling, color

and sex, workers aged 18–64, urban São Paulo and Bahía, 1991 212.6 Decomposition of average wage differentials by color and sex,

workers aged 18–64, urban São Paulo and Bahía, 1980, 1991 233.1A Population by ethnic origins for selected years, Canada,

1871–1951 29



viii Illustrations

3. lB Population by ethnic origins for selected years, Canada,1871–1951 30

3. 1C Percentage distribution, 1961–91 323.1D Distribution (000), 1961–91 33

3A.1 Ethnic origins, definitions 464.1 Probability that a worker is offered an above-average wage 594.2 Duncan Index of occupational status for African American men,

1880–1990 636.1 Household monthly income in Singapore dollars and ratio to

Chinese monthly income by race, 1980 and 1990 956.2 Household type, household size, and household ownership by

race, 1980 and 1990 1016.3 Streaming exam pass rates by race, 1987, 1990, and 1993 103

8.1 Educational achievement, Buraku population and all-Japan,1976 134

8.2 Selected survey results, Burakumin compared to totalpopulation, 1993 135

8.3 Highest level of education attained by Dowa-district Burakumin(1993) and total population (1990) 135

8.4 Highest level of education attained by Dowa-district Burakumin(1993) and all-Japan (1990), by age groups 135

9.1 Race, poverty, and family income 154

9.2 Incidence of poverty, 1957–87 1579.3 Peninsular Malaysia: poverty levels according to urban–rura1

areas, 1970, 1976, 1984 1589.4 Peninsular Malaysia: Gini coefficients, 1970–87 1599.5 Ownership of share capital in limited companies, 1970–90 1609.6 Peninsular Malaysia: average monthly household income

according to ethnic groupings, 1979 and 1984 1609.7 Poverty rate as a percentage of total households, 1995 1629.8 Annual growth rate of share capital ownership of limited

companies, 1990 and 1995 1639.9 Racial composition of University students, 1966–7 and 1985 1659.10 Malay median income as a percentage of Chinese median

income, 1970–84 167



Notes on contributors

William Darity, Jr. is the Cary C. Boshamer Professor of Economics at theUniversity of North Carolina at Chapel Hill and Director of the Institute of African American Research. His research interests include racial andethnic economic inequality, North–South models of trade and growth,interpreting Keynes, the economics of the Atlantic slave trade and thesocial–psychological effects of exposure to unemployment. He has published

over 125 articles in professional journals and authored or edited sevenbooks. 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, readingscience fiction, and coaching youth sports in Durham, NC.

Ashwini Deshpande is Assistant Professor of Economics at the Delhi Schoolof Economics, University of Delhi. Her research interests include inter-national debt and capital flows, economics of discrimination and inequalityand inter-group disparity, with special reference to caste and gender. Shehas 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 Univer-sity of London. During the 1997–8 academic year she was an exchangestudent at the University of North Carolina at Chapel Hill where she firstbecame engaged in comparative research on inter-group disparity acrosscountries, which led, in turn, to her detailed investigation of racial–ethniceconomic differences in her native Malaysia.

Peggy A. Lovell is an Associate Professor of Sociology and Latin AmericanStudies at the University of Pittsburgh. She has conducted fieldwork inMexico and Brazil and previously taught at the Centro de Desenvolvimentoe Planejamento Regional, Federal University of Minas Gerais, BeloHorizonte, Brazil. She has published widely on issues of race and genderinequality in the Brazilian labor market. Her current research includes acomparative study of women in Brazil and the USA and a longitudinalstudy of social change and inequality in Brazil.

Patrick L. Mason is Associate Professor of Economics at Florida StateUniversity. His areas of interest include racial inequality, educationalattainment, income distribution, unemployment, economics of identity,family environment and socio-economic well-being and transitions in familystructure 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 booksinclude 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 hasdone extensive work in rural development of Africa and evaluation of Bankprograms in agricultural structural adjustment. His earlier experienceincludes work in Latin America and Southeast Asia. He has been AdjunctProfessor and Visiting Scholar at Johns Hopkins University, School of Advanced International Studies. His current research is on the economicmobility of four low-status minorities. He is the author of Public Expendi-

tures 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 Developmentin Africa (World Bank, 1981).

R. Quinn Moore is a doctoral candidate in the Department of Economicsat the University of Michigan. His research on race and inequality inSingapore was conducted at the National University of Singapore with aFulbright Graduate Research Grant.

Samuel L. Myers, Jr. is the Roy Wilkins Professor of Human Relations andSocial Justice and Director of the Roy Wilkins Center of Human Relationsand Social Justice at the Hubert H. Humphrey Institute of Public Affairs,University of Minnesota. Myers has pioneered the use of applied econo-metric techniques to examine racial disparities in crime, credit markets,education, mortgage lending, and employment. A graduate of MorganState University, he received his PhD in economics from the MassachusettsInstitute of Technology. He is the past president of the Association forPublic Policy Analysis and Management (APPAM). Myers has publishedseven books and more than 100 articles in peer review journals, essays andbook chapters.

Morton A. Stelcner (1943–2000) was a Full Professor of Economics atConcordia University, Montreal, Quebec. He earned his PhD in economicsfrom the Maxwell School, Syracuse University. His research interestsincluded: labor supply of married women, gender earnings differences, andearnings disparities among Canadian ethnic/linguistic groups. His profes-sional 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 Côte d’Ivoire, Cyprus, Peru, and Turkey. His publicationsinclude articles in reputed journals in economics and sociology, as wellchapters 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-groupdisparity. The idea for this volume emerged out of that issue and would nothave seen the light of day without his encouragement. Between the appear-ance of the 2000 special issue and this volume, we lost a dear colleague andone of the contributors to this volume, Morton Stelcner. We will miss hishumor and his unflagging commitment to intellectual honesty and social justice. William Darity, Jr. would like to thank Kirsten, Aden, and William, hisimmediate family, who constantly prod and challenge him to think rigorouslyabout 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 himin friendship for twenty years, and who has always had the courage to bypassthe conventional boundaries established in the American South. AshwiniDeshpande would like to thank her father, G. P. Deshpande, for comments onthe “race versus caste” debate and her family for putting up with erratic workschedules.

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 beremedied in future editions.

William Darity, Jr.

Ashwini Deshpande





1 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 Economythat we edited in 2000.1 Our interest in understanding patterns of ethniceconomic inequality across countries prompted us to look for comparativestudies and it turns out there is a small but growing body of work (see Nesiah1997; Darity 1998; Darity and Deshpande 2000; Darity and Nembhard2000). Eight general findings have emerged from these studies (Table 1.1summarizes some of these points for a selected group of countries with well-documented inter-group disparity):

1 Countries with a lower general level of income inequality do not necessarilydisplay lower levels of inter-group inequality. For instance, both Brazil,South Africa and Malaysia with high overall inequality levels on the onehand, and Canada, India, Australia and Israel with low overall inequalitylevels on the other have substantial inter-group inequality.

2 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 theHuman Development Index (HDI). Whether they are “high”-HDIcountries (0.8 and above) such as Australia, Canada, Croatia, Israel,Japan, New Zealand, Singapore, Trinidad and Tobago, the UK, and theUSA, or “medium”-HDI countries (0.5–0.799) such as Belize, India,Lebanon, Malaysia, South Africa, Sri Lanka, and Zimbabwe, or “low”-HDI countries (below 0.5) such as Rwanda, Ethiopia, and Eritrea: allhave significant inter-group disparities.

3 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 DevelopmentIndex (GDI), going from 5 for Canada to 135 for Rwanda. The GenderEmpowerment Measure (GEM) is another measure that captures aspectsof 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 gapsbetween racial and ethnic groups, nor does lower economic growthinevitably widen the gap. Neither Malaysia, a country that experienced ahigh 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.5 Inter-group division at sufficiently high levels of tension to produce civil

war conditions or genocidal violence is obviously inimical to economicdevelopment, but the mere fact of inter-group economic inequality is not.This is clear from the experience of the high-income, high-HDI countriesthat have managed to achieve high levels of economic developmentdespite significant inter-group disparity.

6 In all countries where statistical investigations have been undertaken to

assess the presence of discrimination in employment markets, substantialevidence of discriminatory losses in earnings and occupational statusagainst a subaltern group is detected. In societies where group distinc-tions are borne by phenotypical markers, such as color, as in the USA,identifying members of a subaltern group, e.g. the black minority, may beeasier than in other countries, such as India, where there are multiplegroups subjected to subaltern status. For instance, if religion is used as thegroup identifier, then there is evidence of discrimination against minorityreligions such as Islam and Christianity. But if caste is used as a group

marker, then the focus shifts to disparity within India’s dominant religiousgroup (Hinduism), and there is evidence of discriminatory losses againstlower 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 USstandards, although phenotype has never been as decisive as genotype(the so-called one-drop rule: “one drop of African blood makes youblack”), 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 Africanancestry 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 asblack. Therefore, whereas charting racial identity in the USA may beeasier for the detached observer than charting caste identity in India, it isnot necessarily easy to do either. And it would probably be impossible for

the detached observer in Rwanda or Burundi to determine who is Hutuand who is Tutsi. But black identity is unequivocally associated with lowereconomic status in the USA, just as low-caste affiliation is unequivocallyassociated with lower economic status in India.

7 Cross-national evidence does not indicate that employment discrimi-



Introduction 3

nation necessarily declines over time, even in strongly market-orientedeconomies. Labor market studies in Brazil, the USA after 1975, Canada,and even post-apartheid South Africa do not provide evidence of a con-sistent decline in measured discrimination against subaltern groups.

8 Adoption and implementation of remedies for inter-group disparity, such asaffirmative action programs, have not proven sufficient to close the gapanywhere, but there is good evidence to suggest that the gaps would beeven wider in the absence of such programs. Consider, for instance, thecounter-example of Nepal, which is an official Hindu nation that has noaffirmative action for low castes. Here, the low castes and Muslims areseriously under-represented in higher education and the upper end of theemployment spectrum. These minority groups do not have a middle classcomparable 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 GDI rank GEM Gini per capita rank coefficient

Canada High High 5 7 31.5 Australia High High 1 10 35.2United States High High 6 11 40.8Japan High High 11 32 24.8

United Kingdom High High 10 16 36.8Israel High High 22 22 38.1Croatia High Middle 43 33 29Trinidad and Tobago High Middle 45 21 40.3Singapore High High 24 23 n.a.Malaysia Medium Middle 54 43 49.2Brazil Medium Middle 64 n.a. 60.7Sri Lanka Medium Middle 70 64 34.4South Africa Medium Middle 88 n.a. 59.3India Medium Low 105 n.a. 37.8Belize Medium Middle 58 45 n.a.

Lebanon Medium Middle 69 n.a. n.a.Zimbabwe Medium Low 107 n.a. 50.1Rwanda Low Low 135 n.a. 28.9Ethiopia Low Low 142 n.a. 40Eritrea Low Low 133 n.a. n.a.

Source: Human Development Report, 2002, various pages.

NotesHigh-income = GNP per capita of $9,266 or more in 2000.Middle-income = GNP per capita of $756–9,265 in 2000.Low-income = GNP per capita of $755 or less in 2000.

GDI = Gender-Related Development Index: a composite index measuring average achieve-ment in the three basic dimensions captured in the HDI – a long and healthy life, knowledgeand 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 empower-ment – Economic participation and decision making, Political participation and Decision makingand power over economic resources.




One phase of the comparative inquiry involves construction of and exami-nation of international cross-section, cross-country macro-level data on a variety of country characteristics and on group economic differences withineach country. A second phase of the comparative inquiry involves develop-

ment of increasingly detailed and accurate accounts of intergroup disparity foreach country. We believe that both phases feed into each other to produce anuanced account of inter group disparity across countries. In the special issueof 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 onskin color in all parts of the world. In Western Europe and in the Americas,particularly North America, skin color (and phenotype), or what is popularlyknown as “race,” forms the basis of group disparities. Even though it isestablished that there is greater variation in phenotype and appearance withinso-called “races” than between them, the concept of race has proved to be apowerful tool that is used to keep the minorities in these societies segregated,discriminated against and oppressed.3 In a country that celebrates its multi-culturalism, Canada’s use of the term “visible minorities” makes this distinction

explicit. Visible are those whose skin color is not white; the 1986 EmploymentEquity Act designated the visible minorities and other groups such as womenand disabled persons as facing discrimination in the labor market.

As Chapter 3 by the late Morton Stelcner in this volume demonstrates, theracial/ethnic differentiation picture in Canada is complex and the singleumbrella term of “visible minorities” does not capture the multifaceted natureof discrimination in the labor market. However, the fact remains that skincolor or race forms a crucial group marker. Racism or color-based disparityand 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 beinga 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 violentsuch as those in Rwanda, Sri Lanka, Israel or the Ethiopian conflict that led tothe formation of Eritrea. In fact, in African countries where a group of European descent is not involved, ethnic conflicts are between groups whoseidentities are not based on skin color. Indeed, even inside Europe, the Balkan

crisis did not originate in race-based conflicts. In both Singapore andMalaysia, the subject matter of Chapters 6 and 9 in this volume, inter-groupdisparity is based on national origins. Thus, in non-color-based societies, theconflicting groups are not defined on the basis of skin color or race but uponother social categories – religion, nationality or other ethnic groupings. In



Introduction 5

such societies skin color is considered more an individual attribute than agroup characteristic. Thus, it is entirely possible that in these societies individual distinctions in skin color are noticed or might be considered an attributeof beauty, but the defining character of social groups is not their common

skin color.Of course, in such societies, there are internally understood or recognizedmarkers to distinguish members of racial or ethnic groups. These markers maynot always provide correct signals, but they are the operating guidelines intheir particular social context. Rwandans and Burundians generally will claimthey can tell who is what based on various social markers. In Japan theBurakumin typically were identified by their mode of speaking/dress, sincethey lived for many years in segregated communities. Jacob Meerman, inChapter 8 in this volume, suggests that with the dispersal of the Burakumin

ghettos Japan may experience a dissolution of the Buraku identity. That maybe true, but will it also mean that the inequalities besetting persons of Burakuancestry, people scarred by Japan’s history of degrading them, will disappear while they still carry the legacy of deprivation? These questions point to thecomplexity of this issue.

India is a compelling country in that the definitions of group identity aremultifaceted, as we have already seen. Thus, to talk in terms of a singlemajority or a dominant group that is in conflict with one or several subalterngroups 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 subalterngroups would be the low castes. However, as we go to press, India is stillemerging from the aftermath of one of the worst instances of communalcarnage in its history, where forces claiming to represent the majority religion(Hinduism) went on a rampage against Muslims, a small but significantminority. 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 fasci-nated western scholarship, which has often seen direct parallels between racialdivisions in color-segregated societies and caste divisions in India. Whileseveral of the manifestations of racism and casteism are identical, especially

towards those at the receiving end, we would like to suggest that there arefundamental differences between “race” and caste as social categories.4 Weuse the word “race” in a qualified sense: modern physical anthropology nolonger subscribes to the popular typology of race. However, given the wide-spread use of the term and the fact that disparities in several societies are




“race”-based, a volume that discusses both race-based and caste-baseddisparities ought to devote some space to a discussion of “race and caste.” Tobegin with, the histories of the two systems differ greatly. Racism is a directproduct of slavery under colonialism: the ascriptive differences between the

slaves and their masters were extended to defining group characteristics. Thenegative stereotyping of blacks truly began with capitalism and was consoli-dated during colonialism.

Caste, on the other hand, represents a system of social stratification thatpre-dates colonialism by centuries. Therefore, for caste to be color-coded,there would have to be a strong historical basis. The history of present-dayIndia does not in fact offer straightforward answers to why the caste systemought to be color-coded. The racial theory of Indian civilization is a formationof the late nineteenth century, when “in the wake of slave emancipation,

white–black relations in the Anglo-Saxon world were being restructured withideological support from a rush of racial essentialism” (Trautmann 1997:208). Another reason that the theory is erroneous is that the Indus valleycivilization predates the arrival of the Aryan-speaking people, so to argue thatthe Indian ( sic) civilization is the product of the conflict between lighter-skinned Aryans and darker-skinned aborigines is misleading. This racialtheory was extended to the formulation of the racial theory of caste.5 Oneimportant basis of the racial theory of caste is that “Varna” (the ancient Indiancaste 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” areracially different among themselves. Trautmann (1997: 211) analyzes theBritish colonial quest:

In this fantastic back-projection of systems of racial segregation in the American South and in South Africa onto early Indian history, therelations 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 asupposed perduring prejudice of whites against interracial sexualrelations (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 theconstitution of independent India, has investigated the origins of the castesystem in great detail. His analysis of Vedic texts (Ambedkar 1970) firmly

rejects the western racial theory of caste formation.6

He reiterates the pointthat Aryans were not a race. He points out that the word is pronounced in twodifferent 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 7

or “citizen” – none of which indicates a race. He finds no mention in the RigVeda of an Aryan invasion and instead finds evidence of sporadic fightingbetween Aryas and Dasyus rather than a fully fledged conquest. Religionrather 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 racialtheory of caste, the presumed dark-skinned aborigines in contrast to the white-skinned Aryans) were a different race or even of a different skin color.

Given the historical complexities of the origins of the caste system, adetailed assessment is outside the scope of this Introduction; a few commentsare, however, in order. First, the historical origins of the caste system are fuzzyand it is not conclusively established that a system of social stratification didnot exist prior to the Aryan “invasion.” If something akin to the caste systemexisted among the generally dark-skinned aborigines, then skin color would

have not been the basis for the various social distinctions. It also helps toremember 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 descendedfrom the Aryan, thus explaining his superiority in the caste hierarchy.However, it is noteworthy that the Brahman was a professional priest withoutparallel in Aryan tradition elsewhere; in later India, he acquired virtualmonopoly of almost all ritual (Kosambi 1985). Given centuries of migrationand 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, whoare not Brahmans but are typically Kshatriya (though not always; there havebeen important Sudra kings as well). To make the picture more complicated,Kosambi (1985) traces the pre-Aryan features of Brahmanism and also thenon-Aryan descent of several Brahman castes. He suggests that the Brahmanpriest was an individual supported neither by the state nor the king, often onthe tribal fringe. It is with his alliance with the warrior classes that thereorganization 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 thenineteenth-century discourse are difficult to justify: white for Brahmans, redfor Kshatriya, yellow for Vaisyas and black for Sudras. Klass (1980) suggeststhat varna may not refer to complexion or supposed skin color, but rather tosome kind of spiritual coloration or aura (1980: 40). Ambedkar (1970) suggestsseveral meanings of the word varna, one of which is class and finds the lattermeaning 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 highlydetailed caste code, has no reference to skin color as being the basis of theranking of castes.8 Today there are close to 3,000 jatis (the contemporary castedivisions) in existence, and hence a jati–color link is virtually impossible toestablish.




Third, the geographical variations in skin-shade differences in India seem todominate the caste differences.9 India is a virtual ethnographic museum, as allthe 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 longeraccepted by physical anthropology but they persist in popular imagination and we mention them only to point out the regional diversity in phenotype to befound in India. Klass (1980) also points out how skin color and hair colorlightens as one moves from the southeast to the northwest of the country andfinds 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, theBritish administration commissioned investigations into the distinctions inskin shade and phenotypical features (such as length of the nose, cephalic

index, etc.). Herbert Hope Risley (1851–1911), a member of the IndianCivil Service who served in India from 1873 to 1910, was instrumental inconcretizing 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). Oneof Risley’s best-known statements is “the social position of a caste variesinversely 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 ancientIndian 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 3,000–5,000 years ago. Ghurye (1932) summarizes the conclusions of Risley’s studies andreports that a systematic relationship between jati affiliation, skin color andphenotypical features cannot be drawn. He finds, for instance, that a brahmanin Uttar Pradesh has more in common with a “chamar” (a Dalit caste) in UttarPradesh than with a Brahman in Kerala. The predominantly westernpersistence with the racial theory of caste has encouraged some contemporary

investigations into the caste–color correlation, but they are not compeling forthe 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 popula-tions 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 simplylooking at the individual. Often, though not always, jati is indicated by the lastname (surname) of the person. However, naming conventions differ across thecountry: 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 closeto 3,000 categories. However, people have a way of ascertaining the jati of anindividual if they want to – either directly or by discreet enquiry. But thisrequires some effort and a corresponding inclination, which is typically notmade with respect to each person that one interacts with. Thus, while a racial



Introduction 9

affiliation is based upon physical characteristics, a caste affiliation is not, andhence is not immediately possible to decipher.

In conclusion, one can say that skin shade does not form the basis for socialstratification 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 inIndia is “fair” rather than “white”) is considered an attribute of beauty thatearns a premium in the marriage market, but there is no socially recognizedgroup of fair-skinned individuals in opposition to another group of darker-skinned 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 seriousacross an otherwise diverse set of countries. That is what unites the chapters inthis volume. While highlighting the similarities, the individual country studiespresent a nuanced understanding of inter-group disparity across countries,since group divisions in each society are rooted in their individual historiesthat are not uniform across the world.

Two chapters deepen our knowledge of the empirical gaps between groupsand the extent of estimated employment discrimination in Brazil and inCanada. Peggy Lovell’s Chapter 2 in this volume on Brazil consolidates the

puncturing of the still popular myth, the myth of “racial democracy” – thatBrazil is a country where inequality is solely a matter of social class andnot race. France Twine’s superb ethnographic study, Racism in a Racial

Democracy (1998), provides an effective qualitative demolition of the myth, while Lovell’s work provides the detailed quantitative dimension.

Lovell demonstrates that sustained and significant disparities persistbetween Afro-Brazilians (both blacks and browns) and Euro-Brazilians or whites. She also demonstrates that employment discrimination is an importantfactor depressing the earnings and occupational attainment of both black

and brown Brazilians and examines the spatial aspects of disparity anddiscrimination.

In an earlier coauthored study, Morton Stelcner (Stelcner and Kyriazis1995) examined earnings inequality by race and ethnicity in Canada using the1981 Canadian census. Chapter 3 in this volume comprehensively reviews theexisting literature on intergroup disparity in Canada based upon a varietyof surveys, and updates the Stelcner–Kyriazis findings by utilizing the 1991Census. A striking result is the persistence across both censuses of employ-ment discrimination against blacks in Canada. The 1981 study lacked

sufficient observations on Canada’s indigenous peoples to include them in thestudy; that omission is corrected in the 1991 census. It is notable that the 1994World Development Report (UNDP 1994: 25–6, 32, 100) reports that the“aboriginal” population of Canada constitutes about 2.3 percent of the total,possesses a life expectancy 5–6 years lower than the rest of Canadians, and has




a real income one-third less than the rest of Canadians. Moreover, theunemployment rate among Aboriginals is twice as high as the rate for theaverage Canadian, and they are six times as likely to be murdered and far morelikely to suffer from depression.

Patrick Mason’s Chapter 4 in this volume, utilizing US data from the PanelStudy on Income Dynamics (PSID), directs our attention to one of the centralunderlying assumptions of racism, the cognitive inferiority of members of asubaltern group. Mason challenges the position that the inter-racial gap ineconomic inequality in the USA can be explained fully by a black cognitiveskills deficit. Mason’s finding that discrimination still plays an important roleshould not be shocking. Even in South Africa, where racial gaps in schoolingare 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 findsubstantial evidence of market-based discriminatory losses in earnings forblacks (Treiman, McKeever and Fodor 1996; Hinks 1999).

Two of the three remaining chapters in the volume focus on social policiesaimed at addressing intergroup disparity, multiracial meritocracy inSingapore and the reconciliation process in Australia. In his Chapter 6,R. Quinn Moore has coined the phrase “multiracial meritocracy” to describeSingaporean 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 themeritocratic imperative. Proponents of the meritocratic principle in the USA and India argue that this is inconsistent with being color-conscious or caste-conscious. 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 consequencesfor the stark disparities that exist between the aborigines and the rest of Australia’s population. Myers wonders whether reconciliation processeselsewhere – 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 andbeliefs of Australians that might support the status quo or permit conditions tobe changed on behalf of Australia’s indigenous citizens.

The volume has a chapter on India’s caste system (Chapter 7) by one of thetwo coeditors of the volume, Ashwini Deshpande. Elsewhere Deshpande(2000, 2001) has documented the magnitude and persistence of intercasteeconomic disparity in India. Here her task is theoretical. She critically reviewsthe economics literature that has attempted to explain the continuity and

consequences of the caste system. Much of this literature bears a resemblanceto the literature that has emerged on the economics of discrimination andraises some of the same questions. Some of this literature is more nuancedin seeking to establish the contours that distinguish the operation of Indiancasteism for other systems of social domination based upon group identity.



Introduction 11

Jacob Meerman’s Chapter 8 on Japan illustrates yet another grave inter-group disparity that is not color-based. He analyses the disparity between theBuraku minority and the mainstream Japanese, groups that are geneticallyand culturally identical. Discrimination against the Burakumin persists in

making them low-status and low-income. Meerman comprehensively docu-ments facets of discrimination, disparity and segregation. The uniqueness of his chapter lies in linking this situation with an analysis of the militantadvocacy of the Buraku Liberation League (BLL) and the complex inter-relationship between the actions of the League and the Japanese governmentresponse. He reaches an interesting conclusion that, given the high mobilityinto and out of the Buraku, the Burakumin might be considered as a segmentof 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 Jamaludin’s Chapter 9 on Malaysia’s New Economic Policy (NEP)

focuses attention on a unique form of affirmative action. Introduced in the1970s, the NEP was designed, in addition to the reduction of poverty, toprotect the economic interests of the indigenous Bumiputera community, andto reduce inter-racial inequality. While the disparity between the Chinese andthe Malays is well documented and persistent, what is interesting is that a largepart 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 keepinter-ethnic disparity in check (a policy for the protection of sons-of-the-soil). As Jamaluddin’s Chapter 9 highlights, the success of this policy is cruciallylinked to the vagaries of globalization and its impact on the fortunes of theMalaysian 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 theinternational 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, 569–70.4 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 thecaste 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.





Introduction 13

Africa: A Multilateral Approach,” Working Paper, Middlesex University Schoolof Business, October.

Jawal, I. J. S. (1979) “Skin Colour in North Indian Populations,” Journal of Human

Evolution, 8, 362–6.Jones, R. S. (2001) “Black/Indian Relations: An Overview of the Scholarship,”

Transforming Anthropology, 10: 1, 2–16.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: 1,41–79.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, 111–32.

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.



2 Race, gender and regional labormarket 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 post-slavery race relations were said to be harmonious, tolerant and devoid of prejudice or discrimination. The image of presumed equality was basedprimarily on Brazil’s unparalleled level of miscegenation among European, African and indigenous peoples.1 Widespread intermixing of the populationgave rise to a unique pattern of social differentiation in which, allegedly, racialappearance (phenotype) rather than origin was key. Owing to the resulting

ambiguity of racial identity, many Brazilians denied the existence of race orracism in their country. Race relations in Brazil, as a result, received muchattention, especially among North American social scientists.

However, recent empirical research has amply documented the persistenceof racial prejudice and discrimination. Brazil’s image of racial equality haseroded greatly since the 1980s. Today, vigorous public debate over Brazil’simage of racial equality has displaced the ideology of racial democracy. Theoverwhelming evidence makes it clear that racial inequality, prejudice anddiscrimination are Brazil’s social reality.

Scholars often have argued that one of the basic determinants of contem-porary racial inequality is the geographic polarization of Brazil’s economy andpopulation (Hasenbalg 1979, 1985; Andrews 1992). Of the total population in1991, 44.5 percent of the 69,651,161 Afro-Brazilians lived in the impoverishedand 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 handicappedbecause they are concentrated in regions where there are fewer social andeconomic opportunities.

Unequal regional development and population distribution has character-ized Brazilian society since colonial times (Merrick and Graham 1979; Woodand Carvalho 1988). Population and regional imbalances are the legacy of the“boom and bust” cycles of the three colonial export commodities: sugar, goldand 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 intothe Northeast. In the eighteenth century, with the discovery of gold and theconcomitant decline in sugar production, the economic and population centerof gravity shifted to central and southern Brazil. This shift left the once-

wealthy northeastern plantation economy in ruins and from this point ondevelopment favored southern Brazil. It was the southern expansion of coffeeexports during late nineteenth and early twentieth centuries that led to theincipient industrialization of São Paulo, built first on slave and later subsidizedEuropean immigrant labor.2

The great fortunes accumulated from coffee exports provided thefoundation to build São Paulo’s industrial economy and attracted roughly 3.5million European immigrants. By the 1920s São Paulo became the mostadvanced region of the country and by the 1940s the state had the largest

concentration of manufacturing in all of Latin America (Wood and Carvalho1988). The predominantly white regions of São Paulo and the Southeastremain the nation’s locus of manufacturing and finance (Kowarick andCampanario 1986). In 1990, the Southeast produced 56.2 percent of Brazil’stotal gross domestic product (GDP), as compared to the Northeast’s share of 15.9 percent (Baer 1995: 277). Over time, the consequence of such cumulativeeffects has been sharp spatial disparities.

Continued growth and diversification of the Brazilian economy has lessenedbut not eliminated the unequal distribution of wealth and population. From

the 1950s, industrialization in south central Brazil lured Afro-Brazilianmigrants from the Northeast and rural areas to the dynamic urban metro-polises, especially São Paulo. The spatial redistribution of the population wasaccompanied by notable gains in Afro-Brazilian urban employment. Between1950 and 1980 the proportion of individuals of African descent employed incities increased from 36 to 62 percent (Oliveira, Porcaro and Araújo Costa1985). Yet, at the same time, the occupational structure moved toward moreskilled jobs. As a result, in 1991, Afro-Brazilians continued to be dispropor-tionately concentrated in agriculture, construction and personal services –

particularly domestic employment – the lowest-paid and most onerous jobs(Lovell 1998).

Brazil’s four decades of rapid economic expansion and substantial socialand demographic change have erased neither unequal population distributionnor unequal regional development. Despite internal migration, the proportionof the pardo (brown) and preto (black) workforce living in the Northeast fell byonly 6.2 and 7.9 percent, respectively between 1890 and 1991 (see Table 2.1).The phenomenal growth, which the Brazilian economy experienced between1956 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 otherindicators of living standards. Sharp inequalities thus remain between Northand South and between black and white.

In this chapter I address the issue of race in Brazil by examining the



16 Peggy A. Lovell

relationship between uneven regional development and labor marketinequalities. My focus is on labor market disparities among white and Afro-Brazilian women and men. The central thesis of my study is that both racial and

gender discrimination play a significant role in labor market outcomes, yetthese outcomes are mediated by the geographic region’s 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 São Paulo (in the South) and Bahía (in the North). These two regions aresignificant because they reflect the sharp racial and developmental contrastsbetween 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 Brazil’s population.

According to estimates, the 1991 Census reported that nearly half of the 147million population is either pardo or preto. This large proportion of Afro-Brazilians ( 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

Table 2.1 Regional distribution of the population by race, Brazil, 1890–1991

White Pardo Preto

1890

Northeast 32.8 52.1 40.2Southeast 46.5 37.4 51.7South 16.4 4.5 5.0Other 4.3 5.9 3.1

1950Northeast 23.4 58.3 42.0Southeast 49.8 26.1 46.9South 21.9 2.9 6.4Other 4.9 12.6 4.6

1980

Northeast 14.5 49.6 33.2Southeast 53.2 28.3 51.5South 24.8 5.0 8.5Other 7.5 17.1 6.7

1991Northeast 15.0 45.9 32.3Southeast 51.9 30.5 49.9South 24.3 4.6 9.3Other 8.9 19.01 8.5

Sources: 1890, Directoria Geral de Estatistica (1898: 2–3); 1950, IBGE (1956: 69); 1980, IBGE(1983: 34–5); 1991, IBGE (1996: 178–80).




country in the Americas to end slavery and the Portuguese were the largestimporters of slaves, bringing to Brazil 38 percent of the approximate 9.5million 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 skincolor and ethnic identity: branco (white), pardo, preto, amarelo (yellow) andindigena (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 theBrazilian Census leaves no doubt that the categories reflect social definitionsof skin color rather than biological definitions of race. There is controversyregarding the validity of the Census Bureau’s 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 andhave concluded that – while far from perfect – the data are valid enough to yield reliable analyses (Silva 1988, 1996). Nevertheless, doubts remain aboutthe stability of self-reported information over time.

To investigate mobility from one racial category to another, Wood (1991) ina study of 1950–80 Census data found that while the boundary between whiteand Afro-Brazilians was remarkably stable, there was evidence of colorreclassification from the preto to the pardo category. His findings providecompeling reasons to collapse preto and pardo into a single Afro-Brazilian

category when Census data are used to analyse changes in racial disparitiesover time. Based on this evidence, I retain the three-color categories for theanalysis of single-year data and whenever data are compared at two points intime I combine pardos and pretos into a single Afro-Brazilian category.

Workforce characteristics

Associated with the unequal regional distribution of Brazil’s population andeconomic development are disparities in workers’ labor market character-

istics. In Table 2.2, I present summary indicators of the urban São Paulo andBahía workforce by color and sex. The results show substantial racial andregional disparities among women and men in education and state-sponsored worker benefits.

In Brazil, education levels are low. The overwhelming majority of Braziliansnever achieve a high-school or college education. Rates of schooling also varysignificantly by race. Estimates from the 1991 Census showed that, among allBrazilians, the rate of high-school and college completion was three timeshigher 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 (5.3percent for men and 6.1 percent for women) (IBGE, 1996).

In São Paulo and Bahía we find a similar pattern. White women and mencompleted more schooling than either pardos or pretos. In Bahía, theproportion of white women completing 12 or more years of schooling was



18 Peggy A. Lovell

nearly five times greater than the proportion of Afro-Brazilian women.Regional and pardo/preto differentials, on the other hand, followed noconsistent pattern. White women and pretos in São Paulo had higher levels of schooling than their counterparts in Bahía whereas white men and pardo

workers in Bahía were more likely to have graduated from high school or

college than their counterparts in São Paulo.Gender disparities were evident in both regions and across all color

categories. Compared to men, a greater proportion of working women hadcompleted high-school or some post-graduate education. These results maysuggest that, in order to be competitive in the labor market, women must havehigher levels of education than men. Higher educational qualifications may beparticularly important for Afro-Brazilian women’s access to jobs.

Despite evidence of women’s advantage in education, women in all colorgroups were less likely than men to have either “work cards” (possession of

which guarantees the worker legal rights through labor legislation) or to becovered by social security (which provides both health and pension benefits).Regional differences in legal benefits also existed. Workers in São Paulo weremore likely to be covered by federal legislation than were Bahían workers. Thefindings in Table 2.2 also challenge the allegation that women earn lower

Table 2.2 Selected indicators by color and sex, workers aged 18–64, urban São Pauloand Bahía, 1991

White Pardo Preto

Indicator Women Men Women Men Women Men

A São Paulo% completing 12

or more yearsof schooling 24.0 17.6 5.8 3.8 6.9 5.0

Mean hours workedper week 40.0 44.3 41.8 45.4 41.5 44.8

% with work card 69.6 86.3 66.1 87.0 63.8 84.7% with Social

Security 80.0 90.3 71.2 88.5 70.9 87.4

% married 45.3 66.2 41.3 65.7 35.6 63.1

B Bahía% completing 12

or more yearsof schooling 23.7 20.9 7.5 5.0 5.1 3.3

Mean hours workedper week 37.7 43.3 40.3 44.8 41.5 45.0

% with work card 67.4 76.9 58.9 76.4 52.5 77.6% with Social

Security 75.2 80.3 63.7 77.1 57.6 78.4% married 47.2 64.4 39.9 62.9 32.5 63.0

Source: 1991 Brazilian Demographic Census Public Use Sample.




salaries than men because they work less than full-time. With the exception of white women in Bahía, all women worked 40 hours per week or more. Finally,Table 2.2 presents worker participation by marital status. The results showthat 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 thesedata I calculated indices of dissimilarity between each racial and gendergroup. 5 In 1991 the overall index of dissimilarity between women and men was40.8 in São Paulo and 47.7 in Bahía. When the indices of dissimilarity by sex are disaggregated by color, we find that white women experienced the lowest

occupational inequality (38.6 in São Paulo and 37.5 in Bahía) and preta women

Table 2.3 Occupational distribution by color and sex, workers aged 18–64, urbanSão Paulo and Bahía, 1991

Total White Pardo Preto

Occupation M F M F M F M F

A São Paulo

Administration 10.6 5.1 12.5 6.1 5.9 2.8 5.2 2.0Professional 11.6 19.8 13.8 23.2 5.8 9.4 7.4 12.2Clerical 20.5 30.7 22.1 34.7 16.6 22.3 16.4 16.0Industrial 37.9 11.8 33.9 10.8 48.0 15.5 48.2 12.4Transportation/Comm. 9.5 0.3 9.0 0.3 10.9 0.4 10.6 0.2Service 7.8 8.0 7.0 6.5 10.0 12.0 9.7 11.7Domestic 2.1 24.3 1.8 18.3 2.8 37.7 2.6 45.5Total (%) 100 100 100 100 100 100 100 100 Index of Dissimilarity

by Sex 40.8 38.6 46.2 49.8 Index of Dissimilarity

by Color 20.1 29.6 19.4 34.0

B Bahía Administration 7.2 3.6 13.8 6.2 5.9 3.0 3.2 1.5Professional 12.3 28.9 21.9 41.3 10.1 26.4 8.3 17.8Clerical 20.7 25.1 25.0 31.0 20.7 25.0 13.9 14.7Industrial 36.1 4.1 21.7 2.6 38.4 4.5 47.8 4.5Transportation/Comm. 10.7 0.3 9.3 0.2 11.5 0.3 9.4 0.2Service 10.8 9.2 7.3 5.6 11.2 10.1 14.0 11.8Domestic 2.1 28.8 1.1 13.1 2.2 30.7 3.4 49.4Total (%) 100 100 100 100 100 100 100 100

Index of Dissimilarity by Sex 47.7 37.5 49.1 56.4

Index of Dissimilarity by Color 23.4 24.1 35.3 44.5

Source: 1991 Brazilian Demographic Census Public Use Sample.



20 Peggy A. Lovell

suffered the highest disparities (49.8 in São Paulo and 56.4 in Bahía. Theregional comparison shows that gender inequality was greater in Bahía than inSão Paulo for Afro-Brazilians. Two areas of the labor market accounted formost of this gender disparity: the industrial sector where men were concen-

trated and the domestic sector where women were heavily represented.Indices of racial inequality also were higher in Bahía than in São Paulo. Inboth states, racial dissimilarities were greater for Afro-Brazilian women thanmen. Preta women clearly suffered extreme disadvantages in the Brazilianlabor market, experiencing the greatest gender and racial inequality. Much of this disadvantage was due to preta women’s 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 male–female and black–white earningsdifferences. As a result of the persistence of unequal opportunities by race andgender shown in Brazil, we can expect overall differences in wages. If most pardos and pretos have lower levels of schooling and are in low-payingoccupations, then it is not surprising that they experience lower overall wages.Given Brazil’s marked regional inequalities in levels of economic and socialdevelopment, we also can expect lower wages in the Northeast.

Table 2.4 presents overall estimates of average monthly wages for 1991urban São Paulo and Bahían workers between the ages of 18 and 64. As

expected, the findings show that wages were higher in São Paulo than in Bahía.In each region, however, racial and gender gaps in earnings existed. Afro-Brazilians and women, for example, received roughly 60 percent of therespective wages of whites and men in São Paulo. However, both the genderand color wage gaps were highest in Bahía. Preto women and men in Bahía,

Table 2.4 Average monthly wagea by color and sex, workers aged 18–64, urbanSão Paulo and Bahía, 1991

Average monthly wage Women as a percentage of men

White Pardo Preto White Parda Preta

A São PauloWomen 129,331 60.76b 61.27c 57.54d 59.35 61.34Men 224,752 58.91 57.47

B BahíaWomen 109,494 49.12 37.56 51.76 57.75 54.71Men 211,543 44.02 35.53

Source: 1991 Demographic Census Public Use Sample.Notesa 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 Women’s earnings expressed as a fraction of men’s earnings by race.




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 arepresented 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 educationalcategory. The racial wage gap actually increased with education for both women and men. For instance, in São Paulo among women with 0–4 years of schooling, parda and preta women earned roughly 90 percent of the wagesof white women. Yet, at the highest level of schooling, white women earnednearly 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 18–64, urban São Paulo and Bahía, 1991

Average monthly wage Women as a percentage of men

Years of schooling White Pardo Preto White Parda Preta

A São PauloWomen

0–4 Cr$ 67,373 0.90b 0.91c 0.51d 0.54 0.58

5–8 83,784 0.85 0.87 0.56 0.57 0.619–12 127,717 0.80 0.79 0.57 0.61 0.6113+ 242,349 0.76 0.74 0.47 0.57 0.57

Men0–4 130,998 0.86 0.815–8 148,850 0.85 0.809–12 223,616 0.75 0.7313+ 518,939 0.63 0.61

B BahíaWomen

0–4 30,513 0.87 0.79 0.40 0.47 0.455–8 41,023 0.82 0.75 0.47 0.47 0.489–12 88,698 0.72 0.67 0.48 0.49 0.4813+ 242,818 0.73 0.63 0.46 0.52 0.64

Men0–4 75,760 0.74 0.705–8 87,888 0.81 0.729–12 185,344 0.70 0.6713+ 533,219 0.64 0.45

Source: 1991 Brazilian Demographic Census Public Use Sample.Notesa 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 Women’s earnings expressed as a fraction of men’s earnings by race.



22 Peggy A. Lovell

patterns among men, with an even wider racial gap in earnings. At the highestlevel of schooling, Afro-Brazilian men in Bahía earned only 45 percent of the wages of white men. Regional comparisons indicate that racial disparities in wages were higher in Bahía than in São Paulo.

Across all color groups, the wage differential was greatest by gender. Thelargest wage gaps were between white women and men. For example, at thehighest level of schooling, white women earned less than one-half of whitemen’s wages. A comparison of parda and preta women and men shows a similarpattern of gender differences: Afro-Brazilian women were paid less than Afro-Brazilian men in all educational categories. These patterns of wageinequality suggest that gender inequality in wages was even greater than racialinequality.

Labor market discrimination over time

In the USA an extensive literature has explored the persistence of racial andgender wage inequality. Researchers maintain that racial and gender differ-ences in earnings result from structural and economic factors on the one hand,and some type of gender/race discrimination effect on the other. Researchon 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 São Paulo andBahía, I performed a Blinder (1973)–Oaxaca (1973) type of decompositionanalysis based upon ordinary least-squares (OLS) regression with the log of average monthly wages as the dependent variable. In order to explore theextent to which discrimination in Brazil has changed, I analyzed data from1980 and 1991. Because the self-classification of color in the Brazilian Censushas 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: jobexperience, 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 threeparts: composition (the proportion of the difference that can be attributed tounequal human capital endowments), discrimination (the amount of the wagedifferential resulting from unequal pay), and interaction (the proportion of the

wage gap which measures the combined effects of unequal qualificationsand discrimination). The objective of this analysis is to investigate whether –over and above differences in education, occupation and additional socio-demographic variables – race and gender exert independent effects on thedistribution of wages. Wage discrimination is said to occur when similarly




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 São Paulo and Bahía. Wages for Afro-Brazilians and white women

are compared to those of white men. Five overall trends are particularlystriking: (1) Compositional differences were higher in São Paulo than in Bahía which represents greater disparity in human capital endowments among workers in São Paulo. (2) Over time, compositional differences decreasedamong all groups in both regions, reflecting gains in education and jobplacement won by Afro-Brazilians and women. (3) Yet, despite these gains, wage discrimination increased from 1980 to 1991 for all groups in bothregions. (4) Wage discrimination, for both 1980 and 1991, was higher in SãoPaulo than in Bahía. (5) the group which suffered the greatest wage discrimi-

nation was white women; in 1991 a striking 99 percent of the differential intheir pay was due to unequal wages for given characteristics in São Paulo (112percent in Bahía).

Conclusions

In this study I was particularly interested in the relationship between a region’slevel of economic development and labor market discrimination. The findingssuggest that while women and Afro-Brazilians in Brazil’s 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 wagedistribution, they nevertheless experienced the greatest discrimination. In

Table 2.6 Decomposition of average wage differentials by color and sex, workersaged 18–64, urban São Paulo and Bahía, 1980, 1991(Base group = white men)

Afro-Brazilian Afro-Brazilian White women

Component men women

1980 1991 1980 1991 1980 1991

A São PauloComposition 37.32 27.59 12.03 11.56 –3.45 –6.11Discrimination 28.84 40.00 45.09 51.37 90.71 99.26Interaction 33.84 32.41 42.88 37.07 12.73 6.85Total difference (%) 100 100 100 100 100 100

B Bahía

Composition 34.19 26.32 11.99 9.27 –7.16 –9.89Discrimination 9.92 22.82 31.57 46.05 101.71 111.59Interaction 55.89 50.87 56.44 44.68 5.45 –1.70Total difference (%) 100 100 100 100 100 100

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 ineducation, occupation and wages were the most severe, discrimination waslowest. 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 control-ing for the standard predictors of earnings, wage discrimination increasedover time.

These findings suggest that discrimination will not vanish as Afro-Braziliansand women progressively acquire adequate education or access to jobs. Onthe contrary, as evidence from São Paulo indicates, economic growth anddevelopment may generate more opportunities for upward mobility whilesimultaneously increasing competition and strong incentives to erect genderand 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 onlyslightly higher; and both groups always ranked far below whites. As otherstudies 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 Brazilpresents an especially daunting challenge today. Brazil is currently in the gripof a profound economic crisis that has negatively impacted internationalfinancial markets. One can suspect that federal policy and the political

willpower to further women’s and blacks’ social and economic advancement will decrease in an environment of economic crisis. In such a setting of fiscaluncertainty, where Afro-Brazilians compose almost half of the nationalpopulation, white Brazilians have little incentive to accept proposals of redistributive social policies. Likewise, continued structural reform andprivatization of the Brazilian economy will further reduce social welfarespending. These economic changes may very well have a particularly negativeeffect on women and the Afro-Brazilian population in terms of employmentand 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) thatthe idea of racial democracy gained currency. In the USA, observers such asTheodore Roosevelt also promoted the Brazilian ideal of racial equality (Silva1978). Reporting that Brazil had solved the race question, Black newspapers inthe USA during the 1910s and 1920s encouraged black emigration there.(Andrews 1996).

2 Following abolition, Southeast coffee growers used tax revenues and statesubsidies to underwrite the costs of transporting millions of white Europeans tosoutheastern Brazil. Efforts to increase the European population were part of theBrazilian state’s political doctrine of whitening ( branqueamento). The goal was tomake the Brazilian population whiter, Europeanized and therefore, “better”(Skidmore 1974). A conservative estimate would place the total number of




immigrants arriving in Brazil during the period 1820–1930 at between 4.5 and5 million, of whom roughly 3.5 million remained (Merrick and Graham 1979;Gebara 1986). The number of immigrants making their homes in Brazil quicklymatched the number of African slaves imported over a period of 300 years. Themajority of these immigrants clustered in the Southeast, where they remain con-

centrated today. Immigration had important consequences for the newly freedslave. European immigrants received preferential treatment from both employersand the state and succeeded in displacing black workers from the most dynamicareas of the economy. At the moment of entering a free labor market, Afro-Brazilians were pushed aside in the competition for jobs and other opportunities.

3 It is Brazil’s recognition of pardos, an intermediate or mixed racial category, thatdistinguishes Brazilian race relations from those in the USA. Carl Degler (1971)argued that in Brazil, a “mulatto escape hatch” exists whereby mulattoes occupy aprivileged position relative to blacks. Empirical results, for the most part, haverefuted Degler’s argument and found that pretos and pardos, although different insome respects, suffer similar levels of discrimination (Silva 1985; Andrews 1992).

4 The indigena category was not used in the 1980 Census.5 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 occupationalsector distribution of workers. The index is calculated by summing the absolute

values of the differences in distribution for each category and dividing by two. Theresult indicates the percentage of individuals in either racial group who wouldhave to move from one category to another (in the case of Table 2.3, from oneoccupation to another) in order to produce complete equality. An index of 100indicates total difference or complete inequality; an index of 0 indicates no differ-ences and thus complete equality.

6 The decomposition model is:

(Y h – Y l) = [( a h – a l) +Σ X 1( b h – b l)] + Σ b1( X h – X l) +Σ( b h – b l) ( X h – X l)

The notation follows that of Iams and Thornton (1975) where: superscript hindicates the high-wage groups (always white males in this study); superscript lindicates 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 meanof the ith explanatory variable; a is the regression constant; and b l is the partialregression 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, 229–63. Andrews, G. R. (1996) “Brazilian Racial Democracy, 1900–90: An American

Counterpoint,” Journal of Contemporary History 31: 3, 483–507.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, 436–65.Darity, W. A., Jr (1998) “Intergroup Disparity: Economic Theory and Social Science

Evidence,” Southern Economic Journal 64: 4, 805–26.Degler, C. N. (1971) Neither Black nor White, Macmillan, New York.Freyre, G. (1933) Casa-Grande and Senzala, José Olympio, Rio de Janeiro.Gebara, A. (1986) O mercado de trabalho livre no Brasil, Editora Brasiliense, São

Paulo.



26 Peggy A. Lovell

Harris, M. (1970) “Referential Ambiguity in the Calculus of Brazilian RacialIdentity,” Southwestern Journal of Anthropology, 26, 1–14.

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, 451–62.

Hasenbalg, C. (1979) Discriminacão e Desigualdades Raciais no Brasil, Graal, Rio deJaneiro.

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

Angeles, 25–41.Iams, H. M. and A. Thornton (1975) “Decompositon of Differences: A Cautionary

Note,” Sociological Methods and Research, 3, 341–52.IBGE (1996) Censo demográfico – 1991, Característica Gerais da População e

Instrução, IBGE, Rio de Janeiro.

Kowarick. L. and M. Campanario (1986) “São Paulo: The Price of World City Status,” Development and Change, 17: 1, 159–74.Lovell, P. A. (1993) “The Geography of Economic Development and Racial Discrimi-

nation in Brazil,” Development and Change, 21: 1, 83–101.Lovell, P. A. (1994) “Race, Gender and Development in Brazil,” Latin American

Research Review, 29, 7–35.Lovell, P. A. (1998) “Gender, Race and the Struggle for Social Justice in Brazil,” paper

presented at the American Sociological Society’s 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, 90–109.

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) “Male–Female Wage Differentials in Urban Labor Markets,” International Economic Review, 14: 3, 693–705.

Oliveira, L. E. G., R. M. Porcaro and T. C. N. Araújo Costa (1985) O Lugard do Negro

na Força de Trabalho, IBGE, Rio de Janeiro.Skidmore, T. (1974) Black into White, Oxford University Press, New York.Silva, N. do Valle (1978) “Black–White 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.

Fontain (ed.), Race, Class and Power in Brazil, University of California Press, Los Angeles, 42–55.

Silva, N. do Valle (1988) “Côr e o processo de realização socio-economica,” in C.Hasenbalg and N. do Valle Silva, Estructura Social, Mobilidade e Raça, EdicoesVertice, São Paulo, 144–63.

Silva, N. do Valle (1996) “Morenidade: modo de usar,” Estudos Afro-Asiáticos, 30,79–95.

Telles, E. E. and N. Lim (1998) “Does it Matter Who Answers the Race Question?Racial Classification and Income Inequality in Brazil,” Demography, 35: 4, 465–74.

Wood, C. H. (1991) “Categorias censitarias e classificaces subjetivas de raça no

Brasil,” in P. A. Lovell (ed.), Desigualdade Racial no Brasil Contemporâneo,Universidade Federal de Minas Gerias, Centro de Desenvolvimento e Planeja-mento Regional, Belo Horizonte, 93–111.

Wood, C. H. and J. A. Magno de Carvalho (1988) The Demography of Inequality in

Brazil, Cambridge University Press, Cambridge.



3 Earnings differentials amongethnic 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) immigrantpopulation with an increasingly diverse ethnic/cultural profile.2 Canada’simmigration patterns were determined by a number of factors: colonization bythe French and British; the railroad age; the Great Depression; industrial-ization; and economic expansion. During the eighteenth and nineteenthcenturies, nearly all immigrants came from Britain and France (the so called

“founding peoples”). Until the twentieth century, more people emigratedfrom Canada (to the USA) than immigrated. However, the completion of thenational railways attracted an unprecedented number of immigrants fromnorthern, 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 dooruntil the end of World War II. By 1931, Canada was on its way to becoming amulti-ethnic nation in which there was substantial representation of almostevery 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 expandingeconomy. However, the 1953 Immigration Act continued to allow the govern-ment to bar entry for reasons such as ethnicity, nationality, and “peculiarcustoms, habits, modes of life or methods of property.” British, (white) Americans and, to a lesser degree, French immigrants were preferred. By theend 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 asgrowing opposition in the late 1950s to restrictions based on ethnic origin andrace. Legislative changes officially lifted ethnic, racial or religious barriers toimmigrants who were qualified by reason of “education, training, skillsor other special qualifications.” The new regulations, however, still allowed



28 Morton A. Stelcner

European immigrants to sponsor a broader range of relatives than non-Europeans. The 1967 Immigration Act formalized the 1962 regulations andestablished a “point system” for selecting immigrants, with the main purposeof aligning immigrant flows with the perceived needs of the economy. The Act

removed all traces of ethnic, national and racial preferences; it also con-strained the discretionary power of overseas immigration officers. The newimmigration regulations had an immediate and profound effect on immigra-tion streams in the late 1960s and 1970s: the share coming from Europedecreased to about 50 percent, while the proportion from Asia, Africa, theMiddle East, and the Caribbean/Latin America increased sharply to 43 percentfrom 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 togeneral education. The Act introduced “family reunification” as a goal, partlyout of humanitarian considerations, and partly to address labor market needs.In 1982 independent applicants could enter only if they had pre-arrangedemployment, but this requirement was removed in 1986. Prompted by adramatic decline in the birth rate, greater emphasis was placed on the linkagebetween immigration and population growth. The 1978 Act was furtheramended in 1989 to cope with the arrival of large numbers of people claiming

refugee status.

Changes in ethnic diversity: 1970–96

The shift in immigrant source countries since the early 1970s markedly alteredthe ethnic profile. Some 1.5 million immigrants arrived during the 1980s, two-thirds of whom came from non-European regions: the representation of non-British and non-French Europeans declined to 15 percent from 23 percentover 1971–91, 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 30percent of the Canadian population reported a mixed ethnic background.Roughly 85 percent of visible minorities are immigrants, with varying arrivaldates; about 90 percent reside in the large urban areas of Ontario, BritishColumbia, Quebec, and Alberta. The foreign-born share is about 65 percentamong visible minorities with mixed backgrounds (e.g. Black and British,

Chinese, and French), and Southeast Asians other than Filipino andVietnamese (e.g. Japanese, and Korean). There is also considerable variationin nativity status of white ethnic groups. Over 85 percent of British, French,and Ukrainians are Canadian-born, but much smaller proportions are foundamong 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, 1871–1951

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 100.00 100.00 100.00 100.00 100.00 100.00 100.00French 51.40 50.97 53.84 51.55 50.38 54.41 64.37

British and French 151.40 150.97 153.84 151.55 150.38 154.41 164.37

Mixed British/FrenchMixed British/French/ OtherSome British/French 151.40 150.97 153.84 151.55 150.38 154.41 164.37

Total European 162.94 162.72 168.80 175.18 175.99 188.33 202.43

Not European 2.35 6.98 6.56 5.03 4.51 4.51 6.36Not British/French 13.89 18.73 21.51 28.65 30.12 38.43 44.42

Not British/French/Eur 11.54 11.75 14.95 23.63 25.61 33.92 38.06 Austrian 0.36 1.10 2.21 0.90 0.48Baltic 0.04 0.11 0.53Belgian 0.10 0.24 0.42 0.51 0.52Czech/Slovak 0.18 0.56 0.95Dutch 1.33 1.19 1.10 1.40 2.41 2.77 3.94Finnish 0.08 0.39 0.44 0.82 0.65German 9.09 9.98 10.14 10.09 6.05 8.80 9.24Greek 0.00 0.01 0.09 0.12 0.18 0.21Hungarian 0.05 0.29 0.27 0.75 0.90Italian 0.05 0.07 0.35 1.15 1.37 1.82 2.27Jewish 0.01 0.03 0.53 1.91 2.59 2.91 2.71Polish 0.21 0.84 1.10 2.70 3.28PortugueseSpanishRoumanian 0.01 0.15 0.28 0.54 0.35Russian 0.03 0.05 0.65 1.11 2.06 1.64 1.36Scandinavian 0.07 0.20 1.01 2.82 3.44 4.24 4.22

Danish 0.43 0.63 0.64

Icelandic 0.33 0.36 0.35Norwegian 1.41 1.73 1.78Swedish 1.26 1.51 1.46Other Scand. 0.07 0.20 1.01 2.82

Ukrainian 0.19 1.89 2.19 4.18 5.89YugoslavlBalkan 0.08 0.30 0.32Other European 0.96 0.23 0.17 0.17 0.37 0.17 0.25

Not European 2.3 6.98 6.56 5.03 4.51 4.51 6.36 Aboriginal 1.03 4.26 4.18 2.64 2.34 2.40 2.47CanadianTotal Asian 0.00 0.17 0.77 1.08 1.18 1.38 0.90

East/SE Asian 0.17 0.72 0.92 1.14 1.30 0.81Chinese 0.17 0.57 0.70 0.81 0.86 0.48FilipinoKoreanJapanese 0.15 0.23 0.33 0.43 0.32




Table 3.1A Continued

Ethnic group 1871 1881 1901 1911 1921 1931 1951

Vietnamese

Other E/SE Asian 0.05 0.10 0.04 0.09South Asian 0.05 0.06 0.03West Asian 0.09 0.06

ArmenianIranianTurkOther West Asian

Other Asian 0.10 0.04 Arab 0.05 0.10 0.17 0.19 0.18Black (exc Carib.) 0.96 0.84 0.57 0.42 0.38 0.38 0.27Caribbean

Latin AmericanOther Not-European 0.35 1.71 0.98 0.78 0.44 0.18 2.54

Source: Statistics Canada, Various Censuses.

Note0.00 = greater than 0 but less than 0.01.

Table 3.1B Population by ethnic origins for selected years, Canada, 1871–1951

Ethnic group 1871 1881 1901 1911 1921 1931 1951

Total (000) 3,689.26 4,325.81 5,371.32 7,206.64 8,787.95 10,376.79 14,009.43British 2,232.04 2,548.51 3,063.20 3,999.08 4,868.74 5,381.07 6,709.69French 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/FrenchMixed British/French/ OtherSome 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 3,636.81 4,146.90 5,170.52 7,005.58 8,568.58 10,134.31 13,582.57

Not European 52.45 177.91 200.79 201.06 219.37 242.47 426.86Not British/French 310.05 477.37 658.75 1,145.84 1,466.47 2,067.73 2,980.58

Not British/French/Eur 257.60 299.46 457.96 944.78 1,247.10 1,825.25 2,553.72 Austrian 10.95 44.04 107.67 48.64 32.23Baltic 1.97 5.88 35.26Belgian 2.99 9.66 20.23 27.59 35.15Czech/Slovak 8.84 30.40 63.96Dutch 29.66 30.41 33.85 55.96 117.51 148.96 264.27

Finnish 2.50 15.50 21.49 43.89 43.75German 202.99 254.32 310.50 403.42 294.64 473.54 620.00






Table 3.1C Percentage distribution, 1961–91

Ethnic group 1961 1971 1981 1991

Total (000) 18,238 21,568 24,083 26,994

British 100.00 100.00 100.00 100.00French 69.28 64.21 66.56 81.09

British and French 169.28 164.21 166.56 181.09

Mixed British/French 4.45 14.11Mixed British/French/Other 11.29 50.46Some British/French 169.28 164.21 182.29 245.65

Total European 220.77 215.75 229.86 300.22

Not European 7.31 8.36 19.08 55.19

Not British/French 58.79 59.89 66.65 109.76Not British/French/Eur 51.48 51.53 47.57 54.57

Austrian 1.33 0.44 0.42 0.36Baltic 0.80 0.64 0.52 0.52Belgian 0.77 0.53 0.44 0.41Czech/Slovak 0.91 0.85 0.70 0.78Dutch 5.37 4.43 4.22 4.72Finnish 0.74 0.62 0.54 0.52German 13.13 13.69 11.81 12.00Greek 0.71 1.29 1.60 1.99

Hungarian 1.58 1.37 1.20 1.33Italian 5.63 7.59 7.73 9.88Jewish 2.17 3.09 2.73 3.24Polish 4.05 3.29 2.63 3.59Portuguese 1.01 1.94 3.25Spanish 0.29 0.55 1.09Roumanian 0.55 0.28 0.23 0.38Russian 1.49 0.67 0.51 0.50Scandinavian 4.83 4.00 2.92 2.30

Danish 1.07 0.79 0.60 0.54Icelandic 0.38 0.29 0.24 0.19

Norwegian 1.86 1.86 1.06 0.83Swedish 1.52 1.06 0.81 0.57Other Scand. 0.22 0.17

Ukrainian 5.92 6.03 5.47 5.35YugoslavlBalkan 0.86 1.09 1.33 1.73Other European 0.64 0.35 0.06 0.64

Not European 7.31 8.36 19.08 55.19 Aboriginal 2.75 3.25 3.78 6.20Canadian 10.07Total Asian 1.28 2.97 8.04 21.41

East/SE Asian 1.09 1.62 5.04 12.66Chinese 0.73 1.23 2.99 7.72Filipino 0.75 2.07Korean 0.23 0.58Japanese 0.36 0.39 0.42 0.64




Table 3.1C Continued

Ethnic group 1961 1971 1981 1991

Vietnamese 0.32 1.11

Other E/SE Asian 0.10 0.64 0.32 0.54South Asian 0.08 0.71 2.03 5.53West Asian 0.32 1.08

Armenian 0.22 0.34Iranian 0.06 0.51Turk 0.04 0.11Other West Asian 0.00 0.11

Other Asian 0.10 0.64 Arab 0.24 0.28 0.63 1.90Black (exc Carib.) 0.40 0.36 0.47 2.96Caribbean 0.29 0.84 1.24

Latin American 0.37 1.13Other Not-European 2.63 1.22 5.60 12.43

Table 3.1D Distribution (000), 1961–91

Ethnic group 1961 1971 1981 1991

Total (000) 18,238.25 21,568.31 24,083.50 26,994.05

British 7,996.67 9,624.12 9,674.25 7,595.17

French 5,540.35 6,180.12 6,439.10 6,158.68British and French 13,537.02 15,804.24 16,113.35 13,753.85

Mixed British/French 430.26 1,071.88Mixed British/French/Other 1,091.83 3,832.17Some British/French 13,537.02 15,804.24 17,635.44 18,657.89

Total European 17,653.86 20,763.92 22,237.64 22,802.23

Not European 584.38 804.39 1,845.86 4,191.82Not British/French 4,701.23 5,764.08 6,448.06 8,336.15

Not British/French/Eur 4,116.85 4,959.69 4,602.20 4,144.33

Austrian 106.54 42.12 40.63 27.13Baltic 64.37 61.53 50.30 39.61Belgian 61.38 51.14 43.00 31.48Czech/Slovak 73.06 81.87 67.70 59.13Dutch 429.68 425.95 408.24 358.18Finnish 59.44 59.22 52.32 39.23German 1,049.60 1,317.20 1,142.37 911.56Greek 56.48 124.48 154.36 151.15Hungarian 126.22 131.89 116.40 100.73Italian 450.35 730.82 747.97 750.06

Jewish 173.34 296.95 264.02 245.84Polish 323.52 316.43 254.49 272.81Portuguese 96.98 188.10 246.89Spanish 27.52 53.55 82.68Roumanian 43.81 27.38 22.48 28.65




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

Multiculturalism and employment equity

Two major federal policies give explicit recognition to ethnic diversity inCanada. 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 ethnicgroups to maintain and share their cultural heritage and language, and torecognize and promote the understanding of cultural and racial diversity inCanada. Second, the 1986 Employment Equity Act (strengthened by the 1995

Table 3.1D Continued

Ethnic group 1961 1971 1981 1991

Russian 119.17 64.48 49.43 38.22

Scandinavian 386.53 384.79 282.80 174.37Danish 85.47 75.73 57.94 40.64Icelandic 30.62 27.91 22.76 14.56Norwegian 148.68 179.29 102.74 63.03Swedish 121.76 101.87 78.36 43.35Other Scand. 21.01 12.80

Ukrainian 473.34 580.66 529.62 406.65YugoslavlBalkan 68.59 104.96 129.08 131.44Other European 51.45 33.37 5.38 48.56

Not European 584.38 804.39 1,845.86 4,191.82

Aboriginal 220.12 312.76 365.92 470.62Canadian 765.10Total Asian 102.38 285.54 777.44 1,626.50

East/SE Asian 87.35 156.08 487.43 961.23Chinese 58.20 118.82 289.25 586.65Filipino 72.63 157.25Korean 22.10 44.10Japanese 29.16 37.26 40.99 48.60Vietnamese 31.36 84.01Other E/SE Asian 31.11 40.64

South Asian 6.77 67.93 196.38 420.30

West Asian 31.21 81.66 Armenian 21.16 26.01Iranian 5.60 38.92Turk 4.16 8.53Other West Asian 0.30 8.22

Other Asian 8.25 61.54 Arab 19.37 26.67 60.69 144.05Black (exc Carib.) 32.13 34.45 45.22 224.62Caribbean 28.03 81.51 94.40Latin American 36.05 85.54Other Not-European 210.38 116.96 541.48 944.33




Act) addressed labor market disadvantages (such as, hiring, occupationalsegregation, and earnings) of four designated groups by aiming to “achieveequality 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 CensusPublic Use Data Base (released in 1990), and then in the 1991 Census PublicUse Micro File (released in 1994).

Ethnicity in the Census is based on self-identification obtained fromresponses to the following: “to which ethnic or cultural group(s) did thisperson’s ancestors belong?” It must be emphasized that the Census did not askindividuals to identify themselves by “race” or “color.” At the same time, how-ever, 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) 1996Census. The data on visible minority membership in both the 1986 and 1991Census 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 obtainedmainly from responses to ancestral origin that are cross-classified againstother self-reported “cultural” information such as birthplace, mother tongueand religion. As a result, ethnic origin data may differ in interesting ways from

the derived visible minority indicator. For example, a person could self-identify 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 minorityor white. Table 3A.1 shows (p. 36) that the visible minority category containsone 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 discrimi-nation. The large number of studies commonly use the Blinder (1973)–Oaxaca(1973) method to decompose the difference in observed earnings into twocomponents: (1) an “endowments” or “explained” portion that is due to groupdifferences in measured wage-generating characteristics and (2) a “coefficients”or “unexplained residual” portion that is attributable to differences in returnsfor the same characteristics. The “residual” is conventionally interpreted asearnings discrimination.

The greatest attention has been paid to the gender earnings gap.4 By

contrast, only a handful of studies consider disparities between persons withand without disabilities.5 Since Canada has two official languages (English andFrench), there is also a sizeable body of research on the effects of language onearnings and other economic outcomes.6

A growing body of research focuses directly on analyzing earnings




differentials between “whites” (“not-visibles”), visible minorities (“visibles”),and Aboriginals. The studies reveal much variance in the estimates of ethnicearnings discrimination. This is partly due to the usual differences in datasources, sample definitions, the choice of the dependent variable, controls

used in the earnings regressions, and statistical methodology. In evaluatingthe empirical findings it is also important to recognize the limitations of themethod that is used to estimate discrimination.7 A major drawback is that littleis known about the structure of opportunities to enhance earnings capacity prior to labor market entry. There is also inadequate information aboutunobserved and often unmeasured traits such as an individual’s value system(“tastes”), cognitive and affective skills, ability, and motivation. The conven-tional discrimination measure is not immune to biases in different directionsbecause of the “included or omitted variables problem.” The former measure

can under-estimate discrimination to the extent that earnings-determiningcharacteristics reflect indirect discriminatory effects of pre-market factors, which are taken as given and controlled for in the regressions. The discrimi-nation estimate may be over-stated because of omitted or badly measuredproductivity-enhancing characteristics.

In addition, there are other considerations underlying differences in thefindings: the treatment of immigration status, the extent of aggregation of individual ethnic groups, the handling of multiple ethnic origins, and thechoice of the no-discrimination benchmark earnings structure. Most studies

fail to indicate the levels of statistical significance (e.g. standard errors) of thediscrimination estimates.

Group 1: no distinction between Canadian-born and immigrants

An early study by Kuo (1976) used 1969–70 survey data to analyze theearnings gaps between whites and three male Aboriginal groups (North American Indian, Eskimo, and Métis) in the Mackenzie District of NorthernCanada. The gross gaps were: Indian, 84 percent, Eskimo, 66 percent, and

Métis, 53 percent. Kuo found that 84–8 percent of the observed gaps could beattributed to productivity-related characteristics.

Patrinos and Sakellariou (1992) examined the earnings differential betweenmale (North American) Indians and non-Indians using 1986 Labor Market Activity Survey (LMAS) data. Indians faced a gross shortfall of 23 percent; 60percent could not be explained by background attributes.

George and Kuhn (1994) used the 1986 Census to decompose the earningsgap between whites and Aboriginals, separately for men and women. Thegross earnings shortfall of single-origin Aboriginal men was 24 percent, of

which 41–58 percent was unexplained. For mixed-origin men, the shortfall was14 percent, with an unexplained portion of 39–51 percent. Single-origin Aboriginal women earned 17 percent less than white women, where 46–53percent could not be explained. The raw gap of mixed-origin women was9 percent with the unexplained portion being 26–37 percent.




Wannell and Caron (1994) used data from the 1992 National GraduatesSurvey (NGS) to examine earnings of 1990 post-secondary graduates for Aboriginals, visible minorities and Whites (combined male and femalesamples). Since their sample comprises recent post-secondary, it is perhaps

not surprising that they found the observed average earnings of the threegroups to be about the same; the decomposition of the small gaps indicated anabsence 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 52–64 percent was due to background characteristics. The gross differential for multiple-origin Aboriginal men was only 8 percent, one-half of which was due toendowment differences. The gross earnings gap of single-origin women was 12

percent, 92 percent of which reflected discrimination. Multiple-origin womenhad a relatively small wage gap of 3 percent, one-third of which could not beexplained.

DeSilva (1999) also used the 1991 Census to analyze gender-specific white– Aboriginal earnings differentials. For the combined groups of Aboriginal menthe gross earnings shortfall was 34 percent; 38–43 percent could not beexplained. Single-origin Aboriginal men had a gap of 56 percent, with anunexplained portion of 34–45 percent. Multiple-origin men faced a wage gapof 33 percent with discriminatory effects of 23–30 percent. With regard to

women, the earnings gap of all Aboriginals was 23 percent, with 32 percentattributable to discrimination. In the case of single-origin women, the earningsgap was 28 percent, with an unexplained portion of 18–35 percent. Multiple-origin women had a disadvantage of 15 percent, with a discrimination portionof 40–51 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 inexamining earnings differences across an assortment of white and visibleminority groups, separately by nativity status and gender. Reitz and Breton(1994) repeated Boyd’s analysis with a sharper focus on visible minorities anda broader set of control variables.

Discriminatory effects in Boyd were reflected by the net ratio: thestandardized earnings of each ethnic group divided by the overall Canadianaverage. For broadly defined groups of Canadian-born whites and visibles,

neither ethnic group enjoyed earnings advantages; the net ratio was almost thesame for white and visible minority men (102 and 98, respectively) as was thecase for their female counterparts (101 and 103, respectively). With regard toforeign-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.




Immigrant visible minority men thus faced an earnings disadvantage of 20percent, while immigrant visible minority women had an earnings loss of 11percent.

A different story emerged when detailed immigrant ethnic groups were

considered. Most foreign-born white groups earned about the same as theoverall average, but there were some exceptions. Greek immigrant menhad a disadvantage of 12 percent, while a premium was enjoyed by British(12 percent), Jews (10 percent), and Scandinavians (6 percent). Amongimmigrant white women, there was a small earnings loss for Dutch, EastEuropean, and Portuguese (3–4 percent), while an advantage was enjoyed byFrench (8 percent), Croatians (4 percent), and Jews (3 percent). Consideringimmigrant visible minority men, Filipinos had a 21 percent shortfall, followedby Blacks (12 percent), South-East Asian and visible minority British (11

percent each) and Chinese (10 percent). Only West Asian immigrant womenhad a noticeable penalty of 13 percent, while Chinese women enjoyed a slightpremium of 2 percent.

Reitz and Breton (1994) compared the earnings of all whites to severalother origins. Among the Canadian-born, a statistically significant discrimi-nation portion was reported for the following groups: Aboriginal men (73–8percent 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 womenof Multiple/Other origins earned 3 percent more than their white counterparts

of which 33–67 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 byproductivity attributes. Among immigrant men, Blacks faced a gross gap of 26percent, and a net gap of 17–22 percent. Similarly, East/South-East Asian menhad a gross gap of 21 percent, and a net shortfall of 17–21 percent. For Southand West Asians, the gross gap (11 percent) and net gaps (12–13 percent) wereabout the same. Among immigrant women, Black women earned 5 percentmore than white women, an advantage almost entirely due to their produc-

tivity characteristics. Similarly, the earnings of East/South-East Asians were 4percent higher than white women, while their standardized earnings were 5–7percent higher. Immigrant women of Multiple/Other visible origins also hadan earnings advantage of 5 percent, but the net gap was not statisticallysignificant. South and West Asian women had a gross earnings disadvantageof 6 percent, while the net disadvantage was 10–13 percent.

Hum and Simpson (1999) employed data from the 1993 Survey of Labourand 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, andLatin 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




Canadians with controls for immigration status. When a single categorical variable was used for visible minority status, the estimates showed a 14 percentdisadvantage for men and a 7 percent shortfall for women. When specific sub-groups of visible minorities were considered, the results for men showed

significant disadvantages for four groups: Blacks, 19 percent; Non-ChineseOrientals, 16 percent; Indo-Pakistani, 13 percent; and Chinese, 12 percent.The significant estimates for women are Chinese and Indo-Pakistani, 9 percentand 3 percent, respectively.

The authors repeated the exercise for separate samples of Canadian-bornand immigrants. For Canadian-born men and women, visible minoritymembership 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 grossgaps were 26.9 percent and 3.5 percent. The decompositions of these gapsshowed that for the combined samples about 15 percent was due to endow-ment differences, while for the native-born sample 65–85 percent could beexplained by observable characteristics.

Swidinsky (1997) decomposed the earnings gaps between broadly definedgroups of whites and visibles, as well as between whites and four ethnic groups:Blacks; Chinese; South Asians; and South-East Asians. The analysis differ-entiated between men and women and between native-born and immigrants.

For the two broad groups of whites and visibles and combined nativity-status samples (with controls for immigration status), the gross earnings gapfor men was 0.199 and the net gap was 0.057, so that 30 percent was explainedby endowment differences. The gross and net gaps of women were small (1.3percent 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 which57 percent was due to background characteristics. Canadian-born visibleminority women had about the same gross and net earnings advantage (about

5 percent). For immigrant men, the white-visible gross differential was31 percent, with an endowments portion of 57 percent. For immigrant womenthe gross difference was 5 percent, with an endowments component of 36percent.




There was much variation in the results of the four ethnic groups differen-tiated by nativity status. Among Canadian-born men, Blacks faced the largestgross earnings disadvantage (0.339) and the largest net shortfall (0.183), sothat 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. AmongCanadian-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 earnedabout 10 percent less than their white counterparts, and 81 percent was due tocharacteristics. Chinese women earn 20 percent more, but after controlling forcharacteristics 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 menfaced 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 thegross gap of South Asians was 0.196 and 60 percent reflected endowmentdifferences. The earnings shortfall among women was smaller than amongmen. 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 (0.022and 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; andSouth-East Asians. They used the earnings norm of a somewhat unusuallydefined group of white men, namely, a residual category that comprised allethnic groups excluded in the preceding visible minority groups; this reference

included visible minorities such as (visible) Latin American, Arabs andWest Asians. First, they compared combined immigrant and native bornsamples of whites and visible groups; then they considered separate samplesdifferentiated by nativity status. Their estimates of discrimination varied with the scope of statistical controls (e.g. home language, marital status, andoccupation).

The upper and lower limits of their (statistically significant) estimates wereas follows. For the pooled nativity-status samples, the gross earnings gap waslargest among South-East Asians (0.270), followed by Blacks (0.254),

Aboriginal (0.187), Chinese (0.169), and South Asian (0.165). The minimumand maximum values of the endowment component were: South-East Asian(–36 percent and 49 percent); Blacks (–9 percent and 17 percent); Aboriginal(45–55 percent); Chinese (–16 percent and 72 percent), and South Asian (–38percent to 16 percent).




Among the Canadian-born, the gross gap and the range of the endowmentportion were: Blacks (0.293, 25 percent and 42 percent); Chinese (0.193,22–70 percent); South Asian (0.536, 19–59 percent); and Aboriginal (0.179,49–53 percent). The raw gap of South-East Asian (–0.022) was not statistically

significant. The corresponding results for immigrants were: Blacks (0.312,16–31 percent); Chinese (0.232, 23–81 percent); South Asian (0.188, 12–49percent); and South-East Asian (0.396, 21–64 percent).

Pendakur and Pendakur (1998b) analyzed ethnic earnings differentialsusing two methods. They found that among Canadian-born men, the rawdifferential was 0.208 for visibles and 0.348 for Aboriginals, while therespective net gaps were 0.124 and 0.222, so that the unexplained portion was40 percent for visibles and 36 percent for Aboriginals. With regard toimmigrant men, visible minorities earned 25 percent less than native-born

whites; 62 percent of this shortfall could not be explained. Immigrant whitesearned about 10 percent more than their Canadian-born counterparts, butafter controlling for characteristics, they earned 11 percent less.

The gross and net earnings gaps between Canadian-born white and visibleminority women were negligible (–1.3 percent and 0.5 percent, respectively).The gross gap of Aboriginal women was 19 percent, of which 35 percent couldbe attributed to characteristics. Immigrant white and Canadian-born white women earned the same: the gross and net gaps were 0.018 and 0.006. Theearnings 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 reportedfor Greek men (15 percent); Balkan men (11 percent); and single-origin Aboriginals (23 percent); as well as for men of mixed Aboriginal plus whiteorigins (16 percent). Among Canadian-born women, earnings penalties wereborne by Greek women (15 percent) and women of mixed Aboriginal plus white origins (17 percent). For Canadian-born visible minority groups, theyfound significant earnings disadvantages for Black (17 percent) and Chinese

men (12 percent). A very different pattern of results emerged when immigrants were con-

sidered. Among white immigrants, there was a significant earnings gap onlyfor Spanish women (16 percent). For men, Greek immigrants faced a penaltyof 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; theexception was foreign-born Chinese men. The penalty among men rangedfrom 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 menof mixed visible with white origins. There was a shortfall of 18–19 percent forVietnamese, West Asian, and multiple visible with visible origins. Thesmallest disadvantage (about 15 percent) was faced by four groups of men: Arab, South Asian, and other visible, and visible with British origins. The




results for visible minority immigrant women showed that five groups faced anearnings 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 thesubject, 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 fewobservations 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 earningsshortfall was suffered by Native Indians (23 percent), followed by French andOther (7 percent each) and Italian (3 percent).

Stelcner and Kyriazis (1995) used the 1981 Census to analyze earningsdifferences across a large array of male and female white (single-originEuropean) ethnic groups, but owing to data limitations in the Census theiranalysis included only two visible minority groups (Blacks and Chinese); these

problems also precluded the consideration of Aboriginals. Using the earningsstructure of workers of British origin as the benchmark, their main findings were that the standardized or net earnings of most white ethnic groups weresimilar to those of British. There were some important exceptions. Thestandardized earnings of Portuguese, Chinese and Italian men were less thantheir actual earnings, so that these groups enjoy an unexplained premium of 59percent, 17 percent, and 9 percent, respectively. By contrast, Black men faceda gross earnings disadvantage of 18 percent of which 83 percent could be notbe explained. The gross earnings gap among women was smaller than among

men. The decomposition results for women revealed that 55 percent of theBritish–Black gap (0.132) could not be attributed to characteristics. For theremaining ethnic groups, the difference between actual and standardizedearnings was small.

Howland and Sakellariou (1993) used the 1986 Census to investigate thegender-specific earnings gap between all whites (single-origin Europeans)and Blacks, South Asians and South-East Asians. Almost all of the 22 percentgross earnings disadvantage of Black men could not be explained byendowment 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




explained portions were 97 percent and 32 percent, respectively. Black womenearned about 5 percent less than white women, but had a net earningsadvantage 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 threeimportant inter-related issues in assessing ethnic earnings discrimination.First, the 1991 Census revealed that 29 percent of the total population and 32percent of the Canadian-born population reported a mixed ethnic background.Given the percentages, it would be inappropriate to exclude them from theanalysis 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 unquestionablytrue that many non-whites face employment discrimination, the degree to whichdifferent minorities suffer employment and economic disadvantages variessignificantly by group and by region.” Stelcner and Shapiro (1999) addressedthis issue by considering the variation in earnings across thirty-seven separategroups.

Third, the choice of a benchmark group is critical; rather than arbitrarilychoosing a benchmark group, Stelcner and Shapiro follow Oaxaca andRansom (1994) and used the earnings structure of the pooled sample of all

groups as the non-discriminatory norm. Also, to gauge whether discriminationestimates varied with the choice of the non-discriminatory norm they used theearnings structure of the all whites to analyze the earnings gaps of Aboriginalsand visible minorities. Their main findings are now examined.

Results for men

Earnings of the aggregate group of white workers were about 3 percent higherthan 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 andGerman, Hungarian and Ukrainian (5–7 percent); Canadian, British, andOther European (9–11 percent); Other Single Origins (15 percent); and OtherWest European origins (17 percent). Jewish men earned a remarkable 35percent more. Four groups of whites, on the other hand, had significantearnings deficits: Latin American (30 percent); Greek (28 percent); Portu-guese (10 percent); and French (6 percent).

The raw earnings gap also varied among Aboriginal groups. Those withmultiple origins earned 24 percent less than the national average, while single-origin Aboriginal men earned a massive 85 percent less. The gross earningsdisadvantage among individual visible minorities also showed variation. At




the low end were Chinese with 8 percent less, followed by South Asians (9percent); Other East–South-East Asians (10 percent); and Multiple origins(15 percent). In the mid-range of 18–20 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 34percent and 40 percent, respectively.Discriminatory effects were small or not statistically significant for most

individual white ethnic groups, but there were notable exceptions. Thediscrimination component accounted for about 60 percent of the earningsdisadvantage of Greek men and 33 percent of Latin American men.Substantial positive discrimination effects (“nepotism”) were present forPortuguese; the excess of the standardized earnings gap (24 percent) over thegross 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 mixed-

origin 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-relatedtraits.

With regard to visible minority groups, most of the estimated discriminatorydifferentials were statistically significant. For the combined group of visibleminorities, discrimination accounted for 57 percent of the raw earnings gap. If

this group were paid according to the pooled earnings structure, the earningsshortfall would decrease from 15 percent to 7 percent.

The statistically significant discrimination portion of specific groups variedconsiderably from a low of 32 percent for Latin Americans to 110 percent forOther East–South-East Asian. In most cases, the earnings of individual visiblegroups would increase if they were paid according the pooled earningsstructure. 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 thanfor men. The raw earnings gap was trivial (less than 1 percent) for thecombined group of whites (89 percent of the sample) and the aggregate groupof visibles (9 percent of the sample). However, there were interestingdifferences across the detailed ethnic groups.

Mixed British and French and Multiple White origins earned about thesame as the national average. Groups with above average included British,Other West European, and Canadian (4–6 percent); Italian, Polish, Spanish,Ukrainian, and Other European (7–8 percent); Balkan (12 percent); Other




Single origins (16 percent) – and, as was the case for men, a substantial 30percent for Jewish women. Groups with below-average earnings were French,German, and Portuguese (4–6 percent); Hungarian and Greek (7–8 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 visibleminority women differed from that of their male counterparts. Women withMultiple Visible and Other East–South-East Asian origins earned about thenational average, as well as the average of all white women. Three groupsof visible minority women earned more than the national average (or theaverage 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 (20percent); 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 pooledearnings structure, their observed earnings deficit of 7 percent would becomean earnings advantage of 4 percent. Like their male counterparts, discrimi-

nation effects were present for Greek and Latin American women: 67 percentand 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. Thisindicates that, as was the case for Aboriginal men, there was little differencebetween their gross and standardized earnings disadvantage.

The pattern of results for individual groups of visible minority womendiffered from that of their male counterparts. Significant discriminationeffects were found for only five groups. Filipino women earned 18 percentmore than the national average, but would have earned 26 percent more hadthey been paid according to the pooled earnings norm. The unexplainedresidual accounted for 33 percent of the gross gap for Latin Americans, while for Arab and Vietnamese women it was about 40 percent of thegross gap. Chinese women enjoyed a premium of 3 percent, representingone-third of their gross earnings advantage. For the remaining groups,

discrimination effects were not statistically significant. The study alsoconducted sensitivity tests to see if the discrimination estimates varied with the choice of the non-discriminatory pay structure (see 1999 paperfor details).




Conclusions

This chapter has presented an overview Canadian research findings on ethnicearnings differences. The estimates of earnings discrimination vary widely andin several instances are even incongruous.

Differences in empirical methodology contributed to the variance in thefindings in this chapter, yet it appears that the intertwined effects of ethnicityand immigration status, coupled with the choice of the benchmark earningsstructure, play an important role in understanding the different empiricalresults. While most studies give due recognition to the interplay of ethnicityand immigration, the effects of ethnicity (in terms of detailed groups) andnativity status remain confounded because small sample sizes continue tohinder 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 ethnicgroups. First, white sub-groups are sufficiently heterogeneous, so that com-bining them into one category of “whites” and using their earnings structure asa benchmark is problematic. Sufficient evidence suggests that some whitegroups are disadvantaged, while others are favored. Second, the groupscomprising visible minorities also differ among themselves and combiningthem in one “visible minority” category may be misleading in ascertainingthe extent and incidence of earnings discrimination. Compelling evidencesupports the idea that earnings discrimination was by no means uniform across visible minority sub-groups. Third, due consideration must also be given tomultiple ethnic origins among whites, Aboriginals, and visible minorities.Fourth, discrimination estimates for the visible minority groups can besensitive 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 bemuch smaller than those yielded by using the earnings structure of thecombined group of whites.

The set of Canadian empirical results suggests that the precision of thecustomary 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 indesigning, implementing and evaluating the impact of policies that combatlabor market discrimination.

Appendix

Table 3A.1 Ethnic origins, definitions

Not visibleSingle originsBritish English, Irish, Scottish, Welsh, other British, n.i.e.




Balkan Albanian, Bulgarian, Croatian, Macedonian, Serbian,Slovenian, Yugoslav, n.i.e.

CanadianDutch (Netherlands)French Acadian, French, French Canadian, Franco-Manitoban,

Franco-Ontarian, QuébécoisGermanGreekHungarian (Magyar)ItalianJewishLatin American Argentinian, Brazilian, Chilean, Colombian, Ecuadorian,

Guatemalan, Hispanic, Mexican, Nicaraguan, Peruvian,Salvadorean, Uruguayan, Other Latin, Central and South

American, n.i.e.Polish

PortugueseSpanishUkrainianOther 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, SwissOther 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 andItalian)

Visible minoritiesSingle origins

Arab Egyptian, Iraqi, Lebanese, Mahgrebian, Palestinian, Syrian, Arab, n.i.e.

Black/Caribbean Black, Ghanaian, African Black, n.i.e., Barbadian, Cuban,Guyanese, Haitian, Jamaican, Trinidadian and Tobagonian,West Indian, Other Caribbean, n.i.e.

ChineseFilipinoLatin American Argentinian, Brazilian, Chilean, Colombian, Ecuadorian,

Guatemalan, Hispanic, Mexican, Nicaraguan, Peruvian,Salvadorean, Uruguayan, Other Latin, Central and South

American, n.i.e.South Asian Bengali, Punjabi, Singhalese, Tamil, Bangladeshi, n.i.e., East

Indian, n.i.e., Pakistani, n.i.e., Sri Lankan, n.i.e.VietnameseWest Asian Afghan, Armenian, Iranian, Israeli, Kurdish, Turkish, West

Asian, n.i.e.

E./South-East Asian Burmese, Cambodian, Indonesian, Japanese, Korean,Laotian, Malay, Mongolian, Thai, Tibetan, Other Asian,n.i.e.

Other single origins Origins not included elsewhere (e.g. Ethiopian, Somali,Other African, n.i.e., Fijian, Polynesian, Other PacificIslanders)




Multiple origins Combinations of above (e.g. Chinese and Black, British andSouth Asian)

Aboriginal peoplesSingle origins North American Indian, Inuit

Multiple origins Combinations of above (e.g. Métis, North American Indianor Inuit plus other)

Source: Statistics Canada (1992).

Noten.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. Althoughimmigration levels have fluctuated widely throughout Canadian history, since1950 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 8percent in the US, 8.4 percent in Germany, 6.4 percent in France, and 3.5 percentin Britain.

3 According to the 1991 Census the designated groups constituted about two-thirdsof the Canadian labor force: women, 45.9 percent; visible minorities 9.1 percent;

Aboriginal peoples 3.0 percent, and (from The 1994 Annual Employment EquityReport) 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 andPendakur (1998a).

7 The issues are discussed in detail by Shapiro and Stelcner (1987).

References

Abella, R. S. (1984) Equality in Employment: A Royal Commission Report, Supply andServices Canada, Cat. No. MP43-157/1, Ottawa.

Baker, M. and D. Benjamin (1994) “The Performance of Immigrants in the CanadianLabor Market,” Journal of Labor Economics, 12: 3, 369–405.

Baker, M. and D. Benjamin (1997) “Ethnicity, Foreign Birth and Earnings: A Canada/US Comparison,” in M. G. Abbott, C. M. Beach and R. P. Chaykowski(eds), Transition and Structural Change in the North American Labour Market, IRCPress, Queen’s University, Kingston, Ontario.

Baker, M., D. Benjamin, A. Desaulniers and M. Grant (1995) “The Distribution of the Male/Female Earnings Differential: 1970–1990,” Canadian Journal of

Economics, 28: 3, 479–501.Beaujot, R. P. (1991) Population Change in Canada: The Challenges of Policy

Adaptation, McClelland and Stewart, Toronto.




Blinder, A. S. (1973) “Wage Discrimination: Reduced Form and StructuralEstimates,” Journal of Human Resources, 8: 4, 436–65.

Bloom, D. E., G. Grenier and M. Gunderson (1995) “The Changing Labor MarketPosition of Canadian Immigrants,” Canadian Journal of Economics, 27: 4b, 987–1001.

Boyd, M. (1992) “Gender, Visible Minority, and Immigrant Earnings Inequality:Reassessing an Employment Equity Premise,” in V. Satzewich (ed.), Deconstruct-

ing a Nation: Immigration, Multiculturalism and Racism in ’90s Canada , FernwoodPublishing, Halifax, 279–321.

Breslaw, J. A. and M. Stelcner (1987) “The Effect of Health on the Labor ForceBehaviour of Elderly Men in Canada,” Journal of Human Resources, 22: 2, 490–517.

Breton, A. (ed.) (1998) Economic Approaches to Language and Bilingualism, OfficialLanguages Branch, Department of Canadian Heritage, Cat. No. CH3-2-7/1998E,

Ottawa.Chaykowski, R. P. and L. M. Powell (eds) (1999a) Women in the Canadian Labour

Market, Canadian Public Policy/Analyse de Politique, 25: 1, Special Supplement.Chaykowski, R. P. and L. M. Powell (eds) (1999b) Women and Work, McGill–Queen’s

University Press, Montreal and Kingston.Christofides, L. and R. Swidinsky (1994) “Wage Determination by Gender and

Visible Minority Status: Evidence From the 1989 LMAS,” Canadian Public Policy/

Analyse de Politiques, 20: 1, 34–51.DeSilva, A. (1999) “Wage Discrimination Against Natives,” Canadian Public Policy/

Analyse de Politique, 25: 1, 66–85.

DeSilva, A. and C. Dougherty (1996) Discrimination Against Visible Minority Men,Resources and Development Canada, Applied Research Branch, Strategic Policy,W-96-6E, Ottawa.

Driedger, L. (1996) Multi-Ethnic Canada: Identities and Inequalities, OxfordUniversity Press, Toronto.

Employment Equity Act, Annual Report (1994), Employment and ImmigrationCanada, Ottawa.

George, P. and P. Kuhn (1994) “The Size and Structure of Native-Wage Differentialsin Canada,” Canadian Journal of Economics, 27: 1, 20–42.

Grant, J. (1999) “Evidence of New Immigrant Assimilation in Canada,” Canadian

Journal of Economics, 32: 4, 930–55.Green, A. G. and D. A. Green (1999) “The Economic Goals of Canada’s Immigration

Policy: Past and Present,” Canadian Public Policy/Analyse de Politique, 25: 4, 425–51.

Gunderson, M. (1998) Women and the Canadian Labour Market: Transitions Towards

the Future, Statistics Canada Monograph Series, Cat. No. 96-321-MPE No. 2, ITPNelson and Statistics Canada, Toronto.

Harkness, J. (1993) “Labour Force Participation by Disabled Males in Canada,”Canadian Journal of Economics, 26, 878–89.

Howland, J. and C. Sakellariou (1993) “Wage Discrimination, Occupational Segre-

gation and Visible Minorities in Canada,” Applied Economics, 25, 1413–22.Hum, D. and W. Simpson (1996) “Canadians with Disabilities and the Labour

Market,” Canadian Public Policy/Analyse de Politiques, 22: 3, 285–99.Hum, D. and W. Simpson (1999) “Wage Opportunities for Visible Minorities in

Canada,” Canadian Public Policy/Analyse de Politiques, 25: 3, 381–94.






Immigrant and Native-Born Canadians,” Department of Economics, University of Guelph, September, mimeo.

Vaillancourt, F. (1997) “Economic Costs and Benefits of Official Languages: SomeObservations,” in New Canadian Perspectives: Official Languages and the Economy,Department of Canadian Heritage, Cat. No. CH3-2/5-E, Ottawa.

Wannell, T. and N. Caron (1994) A Look at Employment Equity Among Recent

Postsecondary Graduates: Visible Minorities, Aboriginal Peoples and the Activity

Limited, Statistics Canada, Analytic Studies Branch, Research Paper Series No.69, Ottawa.



4 Understanding recent empiricalevidence on race and labor market

outcomes in the USA *

Patrick L. Mason

Introduction

The sentiment against Black men appears, unfortunately, to be wellearned, and it is difficult to believe that many competent Black workersare being denied opportunity.

(Mead 1992: 114, quoted in Petterson 1998: 761)

[T]he worldview of Blacks make them uniquely prone to attitudescontrary to work, and thus vulnerable to poverty and dependence.

(Mead 1992: 148–51, 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 anexcellent example of both consensus and contention. For example, there is astrong consensus that racial wage inequality declined sharply for nearly adecade after the passage of the Civil Rights Act of 1965. Further, it is acceptedthat there were multiple causes of this decline: strong economic growth and atight labor market, great improvements in the quantity and quality of African American education relative to whites, and strong anti-discrimination andaffirmative action enforcement. Collectively, these forces contributed to arapid reduction in the residual wage differential between the mid-1960s andmid-1970s – that is, the fraction of the African American – white wagedifferential that cannot be explained by differences in individual attributessuch as education and experience. The reduction in the residual wage wasaccepted 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 themovement toward racial wage equality in the mid-1970s. In fact, an expansionof the residual wage differential set in some time during the 1979–81 interval.However, explanations of the slowdown and eventual expansion of the racial wage differential are a source of great disagreement. For example, Darity andMason (1998) conclude that African Americans receive a 15 percent wagepenalty 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 nolonger an important issue in the American economy; the slowdown andexpansion in racial wage inequality since the mid-1970s is due to an increasingrate of return to cognitive ability that has increased general inequality, not

discrimination. Loury (1998) argues that although labor market discrimi-nation remains a minor problem, economists have not paid sufficient attentionto supply-side inequities that are responsible for producing racial disparitiesin productivity-linked characteristics prior to entering the labor market.

This chapter will review some of the recent empirical research that attemptsto explain the slowdown and expansion in racial wage inequality.

Triumph of the market?

A careful reading of the entire body of available evidence confirms thatmost of the disparity in earnings between blacks and whites in the labormarket of the 1990s is due to the differences in skills they bring to themarket, and not to discrimination within the labor market . . . [L]abormarket discrimination is no longer a first-order quantitative problem in American society.

(Heckman 1998: 101)

For James Heckman, today’s racial inequality persists despite the meritocratic

influences of the market and the federal government’s anti-discriminationactivity during the eras of the Civil Rights and Black Power movements, 1954–65 and 1965–73, respectively. African Americans are paid less because theirlaboring activity is worth less, because they come to the market with deficientskills. Lawrence Mead claims that the source of deficient skills is African American culture. Herrnstein and Charles Murray (1994) argue that thesource of deficient skills among African Americans (and low-wage whites) islower 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 sourcesand extent of African American inferiority.

Proponents of the labor-quality hypothesis argue that dramatic increases inthe rate of return to educational quality (cognitive ability) are responsible forthe increasing earnings inequality that has characterized the Americaneconomy since 1980. It is then argued that the distribution of cognitive skills isdetermined by a number of pre-market factors and processes, such as familystructure and values, the quality of one’s neighborhood during an individual’sformative years, inherited ability, the quality of schools attended, and so forth.

It is not often acknowledged that racial differences in educational quality haveexhibited a substantial downward trend prior to and during the period of increasing racial wage inequality. Instead, labor-quality proponents stead-fastly assert that African Americans have a relatively inferior set of pre-marketskill accumulation factors.



54 Patrick L. Mason

The presumed inferiority of African American’s pre-market skill accumu-lation factors are explained by discrimination in pre-market activities andinstitutions, cultural differences across racial groups, or alleged racial differ-ences in genetic inheritance. Nevertheless, since pre-market factors, processes,

and institutions are largely immune to market competition, there are noeconomic forces acting to equalize these variables across racial groups.Hence, it is concluded that the slowdown and eventual deterioration in inter-racial wage equality since the mid-1970s has occurred because a host of pre-market factors are responsible for trapping the average African American inthe lower half of the white skill distribution. Presumably, the increase in theprice of skill has been sufficiently dramatic to magnify the declining inter-racial skills gap into an increasing racial wage gap.

We may use a standard individual wage equation to illustrate our discus-

sion. Consider (4.1), where X is a vector of productive attributes, such asexperience, job tenure, and education, and other wage determinants, suchas union status, region of the country, and residential location, and R is adichotomous variable such that R = 1 if the individual is African Americanand 0 if the individual is white:

ln(wage) = β0 + ΣβiX i + β r R + ε. (4.1)

In a wide variety of studies and over a long period of time, economists find

consistently that –0.10 < β r < –0.20. Since the gross or unadjusted African American–white male wage ratio is about 0.70, this coefficient implies thatone-third to two-thirds of the earnings gap is due to race-specific factors. Formany years, racial discrimination was assumed to be the primary reasonbehind the “unexplained” or “residual” racial wage gap.

The labor-quality proponents (for example, see Neal and Johnson 1996) would explain β r < 0 by claiming that African Americans have a lower qualityof labor (provide less skilled labor) than observationally equal white workers.This research suggests that β r < 0 because of omitted variable bias. The

traditional human capital variables (years of education in particular, but alsoexperience and job tenure) do not fully capture presumed white superiority inlabor quality.

Equation (4.2) presents the labor-quality hypothesis in its most generalform. Earnings are positively correlated with unobserved ability (βt > 0), which is unequally distributed across racial groups. After controlling forunobserved ability, labor-quality proponents argue that race has no indepen-dent influence on earnings (β r = 0):

ln(wage) = β0 + ΣβiX i + β r R + βtUnobserved Ability + ε. (4.2)

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




ability. For most other labor-quality proponents, differences in AFQT scoresalso indicate differences in the quality of productive attributes. However, the AFQT represents an index of otherwise unobserved skills learned at home, inschool, in one’s neighborhood, or perhaps even purchased in the market.

Regardless of the ultimate source of inter-racial differences in pre-labormarket unobserved skills — biology, pre-labor market discrimination, orculture – labor-quality theorists all claim to demonstrate that after adjustingfor differences in test scores inter-racial differences in wage rates becomeinconsequential.

There are economists who do not share Heckman’s evaluation of theliterature on the economics of discrimination, or Mead’s and Herrnstein andMurray’s 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 seniorsas proxy variables for pre-labor market differences in unobserved ability. Theydo find that an increasing rate of return to cognitive skill is an importantexplanatory variable for the 1980s increase in intra-racial wage inequality (0 <βt,1978 < βt,1986). They do not find that the increasing rate of return to ability canexplain the rise in inter-racial wage inequality during this period (0 > β r ,1978 >β r ,1986). If both racial discrimination and the rate of return to skill increasedduring the period of their study (1978–86), then it is possible that an increasingrate 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 unbiasedproxy variable for pre-labor market inputs that might be expected to increaseproductive ability. They find that the influence of maternal education, mater-nal cognitive ability, and family income on a child’s 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 producemisleading results. Indeed, when Currie and Thomas plot women’s wagesagainst AFQT they find that African Americans obtain higher wages for anygiven level of AFQT. Given the racially distinct weights assigned to determi-nants of skill, it is reasonable to infer that there is systematic bias in the testscore that is negatively correlated with being an African American. Neitherthe AFQT nor the ASVAB score captures the effect on family and schoolinputs 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 differencesin 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 thecomposite score, the coefficients on the verbal components are positive and



56 Patrick L. Mason

significant for African Americans, while the coefficient on the math compo-nent is basically zero. The relationships for whites are exactly the opposite. Tothe extent that there actually is an inter-racial skills gap, inter-racialdifferences in AFQT scores severely over-estimate this gap. Because there are

substantive inter-racial differences in how family (and other so-called “pre-market”) environments are captured by the AFQT, racial differences in AFQT scores are greater than racial differences in skills rewarded in the labormarket.

Utilizing a measurement bias-corrected AFQT score (T) as a proxy of unobserved ability (4.3), Rodgers and Spriggs (1996b) do find that cognitiveskill has a positive correlation with the wage rate, i.e. βt > 0. However, themagnitude of β r is approximately –0.15 with or without the inclusion of T in the wage equation:

ln(wage) = β0 + ΣβiX i + β r R + βtT + ε. (4.3)

Beyond the fact of measurement bias in AFQT scores, there may beunobservable skills that are not proxied by the AFQT and that are larger for African Americans than whites. Mason (1997) and Goldsmith, Veum, andDarity (1997) address this issue. These studies explore the inter-relationshipsamong 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 labormarket outcome as whites. Whether this is a real or only perceived condition,it may have very interesting effects on individual behavior through its impacton group culture. For example, parents, community leaders, or other leadersfor a group whose median standard of living is below the national average willimpart to younger generations the knowledge that catching up to the nationalaverage requires that individual group members put forward supra-normallevels of effort in skill accumulation and have larger amounts of psychologicalcapital. 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 insightinto the nature of the discriminatory process. Examining the changes in wagerates between 1986 and 1993, Rodgers and Armentrout (1996) estimate thefollowing fixed-effects model:

∆ln(wage) = β1∆X + βt AFQT + γ Training + ε, (4.4)

where Training = 1 if the individual participated in a training programbetween 1986 and 1993, but 0 otherwise; and α2 represents the growth in theprice of skill from 1986 to 1993.

Rodgers and Armentrout find that, “The market value of cognitive skills




only rises for white men [who did not participate in a training programbetween 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 6.7–10.7 percent payoff over the premium African Americans receive for training. This additional white gain is due tohigher white payoffs for actual experience and formal training. BecauseRodgers and Armentrout explicitly control for ability, the racial differential inthe return to training (and experience) provides prima facie evidence of racialdiscrimination in the face of competitive markets.

Mason (1999a) estimates the following equation:

ln(wage) = β0 +ΣβiX i + γ 1(percent white male) + γ 2(percent white

female) + β r R + βt IQ + e, (4.5)

where IQ represents the score on a sentence completion test and the X vectorincludes a large number of variables related to the individual’s socio-economicand family background. For white males, I find that γ 1, w > 0 and γ 2, w > 0. That isto say, for white males, individual wage rates are positively correlated with thefraction of the laborforce that is white. For African American males, I find thatindividual wage rates increase as the fraction of the occupation which is whitemale increases (γ 1, A > 0).

On other hand, the percentage of white females in the workforce has noimpact on the wage rate of African American men (γ 2, A = 0). Finally, despitethe 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 < β r < –0.07. (The upper bound is producedby OLS estimation, while the lower bound is produced by random effectsestimation.) So, just as Mason (1995) predicts, job segregation reduces theprobability of an African American getting into a high-wage job and, giventhat an African American has obtained any job, 28–68 percent of the inter-

racial 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 returnto tenure; however, African Americans receive a lower rate of return to eitheractual or potential labor market experience. For African Americans, but notfor whites, there is a statistically significant difference between actual andpotential experience. Bratsberg and Terrell suggest three explanations forthese results. (1) Changes in the legal environment encouraged employers tosubstitute forms of discrimination. The advent of affirmative action (and anti-

discrimination laws) has encouraged employers to substitute on-the-jobtraining for higher wages for white workers. (2) Employee discriminationdeclines 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 tenureincreases; accordingly, incorrect perceptions of differences in worker abilityacross 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 atlabor force entry, a gap does develop over time. The gap emerges because African Americans receive a lower rate of return to experience and smallergains 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 processeshelps to explain African Americans’ lower rate of return to experience. Forexample, Fairlie and Sundstrom (1999) show that the current racial unemploy-ment ratio is substantially higher than it has been in past generations, and that

this ratio increased during the 1980s. Today, the African American–whiteunemployment ratio is more than 2:1 but prior to 1940 there was unemploy-ment equity. The recent rise in the unemployment ratio has occurred becausethe 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 Holzer1993; 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 20–40 percent of the African American– white male unemployment differential can be explained by observed charac-teristics. We know also from audit studies that employment discriminationdegrades the market opportunities of African Americans and Latinos relativeto white workers. African Americans and Latinos have less chance of gettingtheir job applications accepted, have lower probabilities of obtaining a jobinterview 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 correspond-ingly higher reservation wages among African Americans. Replicating theinfluential study of Holzer (1998), Petterson also finds a racial difference inreservation wages. In his sample of young men, Petterson finds that African American reservation wages exceed those of whites by 2–13 percent. But hedoes not find a relationship between the reservation wages of young workersand 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 wereindeed over-represented in smaller firms in the mid-1960s, but they are under-




represented in smaller firms today. Holzer concludes that smaller firms aremore likely to engage in racial employment discrimination than larger firmsare. 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 governmentmonitoring and corrective action, they are more likely to use formal ratherthan subjective hiring procedures and have greater exposure to public censureif they engage in discriminatory behavior.

Black (1995) shows that in a monopsonistic labor market with bothprejudiced and unprejudiced firms and workers who engage in sequential jobsearch, African Americans will have higher job-search costs than whites since visits to prejudiced firms are without value to African American workers.Since a firm’s 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 Black’s model white workers earn an identical wage regardless of whether they work at a prejudiced or unprejudiced firm. However, prejudicedfirms 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 workerssystematically receive higher wage offers than African Americans (Table 4.1).

Workers with above-average skills are more likely to be offered jobs withabove-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 responsecoefficient for African Americans increases from –0.46 to –0.41 and it remainsstatistically 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)

Worker has above-average skills 0.920(9.52)

Worker has below-average skills 0.165(0.60)

Worker is black –0.460(2.73)

Worker is female –0.013(0.16)

Worker is from a nonblack, nonwhite ethnic group –0.070(0.50)

Source: Black (1995: 319).

Notet-statistics are given in parentheses.



60 Patrick L. Mason

Pre-market factors and racial wage inequality

Loury (1977) has argued that an individual’s social capital, or family andcommunity background, yields nontradable social relations and cultural attri-butes that influence economic well-being. For Loury, social capital is a vital

element for inter-generational transmission of socio-economic status. But thenontradability of social capital implies that equal quantities of observedindividual attributes will not yield identical rates of returns and, if socialcapital differs by race, racial inequality will be transmitted from one gener-ation to the next in perpetuity.

Samuel Bowles (1972) argued more than a generation ago that class is animportant determinant of individual education and earnings. Similarly,Granovetter’s (1988) job network analysis demonstrates that individualeconomic attainment is related to the extent of one’s connections to individuals embedded in positions of power and authority in the marketplace.Persons from high socio-economic status backgrounds will have moreaccessible and more varied connections to the set of individuals embedded inpositions of power and authority. In a race- and class-segregated society suchas the USA the impact of embeddeness on individual economic outcomes willbe larger among whites than among African Americans.

Equations (4.6) and (4.7) summarize a narrow interpretation of Loury’ssocial capital hypothesis. This interpretation preserves a meritocratic ideologyof the market even as it allows so-called “pre-market activity” to be decidedlynon-meritocratic. Individual human capital accumulation ( H ) is a function of individual attributes ( A), parental socio-economic status ( F ), racial or ethnicgroup socio-economic status ( R), and the socio-economic status of one’sneighborhood ( N ). In turn, individual earnings (W ), as well as other labormarket 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 humancapital accumulation reflects class position (C). Additionally, class is a directdeterminant of labor market outcomes:

H = h(C), and (4.8)

W = w( H , C). (4.9)

The broad interpretation of Loury’s social capital hypothesis substitutes socio-economic status for class but preserves Bowles’ analytical structure. Hence, we have:

H = h( A, F , R, N ), and (4.10)




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 studiesare clearly conformable with both the broad and narrow interpretations of social capital.

For example, Borjas (1992, 1995) has empirically examined the impactof parental socio-economic status and social capital on inter-generationalmobility, where “social capital” consists of neighborhood and white ethnicgroup socioe-conomic status. Borjas (1992) demonstrates that both father’ssocio-economic status and the average socio-economic status of an individual’s ethnic group have a sizeable impact on individual educational

attainment, occupational attainment, and hourly wage rate. After controllingfor individual attributes, Borjas (1992) finds that father’s education (parentalcapital) and ethnic group’s education (ethnic capital) have a convergencecoefficient of 0.48 with offspring’s education in the General Social Survey(GSS) and 0.38 in the NLSY.3 However, parental capital alone has aconvergence coefficient of 0.27 in both datasets. In the GSS, parental andethnic capital have a convergence coefficient of 0.57 with occupational status, while the convergence coefficient is 0.60 with individual wage rates in theNLSY. 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 aninter-generational mobility process similar to whites. The simulation suggeststhat including ethnic (or in this case racial) capital under-predicts educationalattainment in the NLSY, though it is more accurate in the GSS dataset.Including racial capital may improve the prediction of African Americanoccupational 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 lowerlevels of racial capital than whites, but Borjas’ (1992) results indicate that African American racial capital may have very little effect on African Ameri-can inter-generational mobility. It would appear that African Americans facea more meritocratic marketplace than whites.

Borjas (1995) shows that so-called “ethnic capital” is not simply a proxy forthe socio-economic status of the neighborhood where an individual was raised.The mean status of an ethnic group is an excellent proxy for neighborhoodsocio-economic status; nevertheless, ethnic capital has an independent impact

on inter-generational mobility “when children are exposed frequently to otherpersons who share the same ethnic background” (1995: 366). The rate of meanconvergence increases with the extent of neighborhood segregation – thatis, the impact of ethnic capital on inter-generational mobility increases asthe 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 increasesrelative 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-economicstatus would be related solely to individual attributes and “natural ability.” InBorjas’ (1995) theoretical model, parental, neighborhood, and ethnic groupsocio-economic status increase individual human capital accumulation. So,although non-market processes may not be meritocratic, competitive marketsremain meritocratic since each person is rewarded in proportion to his/herhuman capital. Yet, there is nothing in Borjas’ (1995) empirical analysis thatrules out the “broad” interpretation of social capital. Hence, an equally validinterpretation is that Borjas’ research indicates that among whites parental,

neighborhood, and ethnic socio-economic status will substantially retard theoperation of any meritocratic tendencies within the US economy. Class effectsconstrain the meritocratic elements of the market competition. Regardless of whether one applies a broad or narrow interpretation of the social capitalhypothesis, socially and economically segregated neighborhoods are animportant institutional mechanism for the transmission of inequality acrossgenerations.

Darity, Dietrich, and Guilkey (1997, 2001) provide innovative researcheson the impact of race on inter-generational mobility. In 1880 the human

capital characteristics of African American men reduced their occupationalstatus 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 by31 percent. By 1910 the reduction in occupational status due to deficienthuman capital was just 19 percent, despite the rise and consolidation of “JimCrow” during the years 1880–1910 (Table 4.2). Yet the impact of marketdiscrimination increased from 31 to 44 percent during this same period.Darity, Dietrich, and Guilkey explain that:

Decreasing losses associated with deficient characteristics tracks well withthe sharp rise in black male literacy, while increasing losses attributable todisadvantageous returns to characteristics track well with the hardeningof Jim Crow practices in the US South. This may suggest evidence of asimple pattern of endogenous discrimination: as blacks became harder toexclude from preferential employment and status positions on grounds of qualifications, outright exclusion intensified.

(1997: 304)

Darity, Dietrich, and Guilkey (2001) assess whether group occupationalstatus in 1880, 1900 and 1910 has an impact on individual occupational statusin 1980 and 1990. At the turn of the century African American men attainedlower occupational status because of market discrimination and lower human




capital characteristics. The lower human capital characteristics among African American males was directly related to slavery and the rise andconsolidation 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 deficitscontinued to have a negative impact on the occupational status of African American males 100 years later. Of course, some white men had humancapital characteristics similar to those of African Americans at the turn of thecentury, however they also received market premiums that they were able topass on to their ethnic descendants some four generations later. Currentgenerations of whites continue to benefit from past racism, while currentgenerations of African Americans are harmed by it.

In an inter-city comparison of socio-economic outcomes for individuals

ages 20–4 and 25–30, Cutler and Glaeser (1997) find that residential racialsegregation decreases earnings of African Americans and increases theprobability of becoming a single parent. They find also that racial segregationlowers the probability that an African American will graduate from highschool or obtain employment. Empirically, they find that a 13 percentreduction in residential segregation will eliminate one-third of the racial gapin these areas. Curiously, they find that segregation has no impact on thesocio-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 thatreproduces intergenerational inequality.4 However, we have seen already thatMason (1997) and Goldsmith, Veum, and Darity (1997) present evidence of apositive relationship between African American culture and individual wagerates 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 orsex, family behavior is substantially less important for determining socio-

economic status than family class background. As a rule, childhood familysocio-economic status explains twice as much of the variation in socio-economic outcomes among individuals of a particular race–sex group aschildhood family values.

Additionally, inter-racial differences in family values have very little impact

Table 4.2 Duncan Index of occupational status for African American men,1880–1990

1880 1900 1910 1980 1990

Characteristics –0.297 –0.224 –0.185 –0.148 –0.110Rate of return –0.312 –0.385 –0.439 –0.165 –0.139

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



64 Patrick L. Mason

on the residual difference in wages and hours of employment. Racial differ-ences in class background, however, can explain up to 60 percent of theresidual wage differential and up to 20 percent of the hours of employmentdifferential. I am unable to determine whether the class effect on the residual

wage and employment differences occurs because of the narrow or broadsocial capital hypothesis. Mason (1999b) also confirms an earlier finding: African Americans are able to translate a given amount of sources into ahigher level of educational attainment than an otherwise identical whiteindividual. Hence an alternative interpretation of the Cutler and Glaeser(1997) results is that inter-city variations in racial segregation are an indicatorof inter-city differences in market and non-market discrimination against African Americans. In this light, a reduction in segregation increases the well-being 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 similarfinding. They find that residential segregation increases the probability that an African American employee will be forced to quit when her/his employermoves from downtown Detroit to suburban Dearborn. Specifically, whiteemployees who faced an increase in commuting distance were more likely to

move and no more likely to quit than white employees whose commutingdistance declined. An increase in commuting distance combined with resi-dential segregation forced 11 percent of African Americans to quit theiremployment.

Finally, given the importance of educational quality for the neoclassicalargument that an increasing rate of return to cognitive ability has been thedriving force for increasing racial inequality, it is instructive to see whetherpoor-quality schools have been an important transmission mechanism forracial 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) alsoshows 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 toschool quality were of modest magnitude.5

Discussion

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




African American education relative to white education, brought about areduction of inter-racial inequality and racial discrimination in the labormarket 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 changeshave contributed to an environment that encourages racial discrimination inthe labor market. According to Leonard (1991: 105), “affirmative actionunder the contract compliance program virtually ceased to exist in all butname after 1980s.” Leonard provides rather strong evidence that the federalgovernment emasculated the Office of Federal Contract ComplianceProgram, the enforcement vehicle for affirmative action within the federalgovernment. 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 declinedsubstantially in the 1980s with the advent of the Reagan administration. Accordingly, they find that contractor status made a greater contribution tofirms’ relative employment of non-white workers after the Reagan yearsthan contractor status made during Reagan’s control of the federal anti-discrimination and affirmative action machinery.

The stagflation of 1974–5 and stagnation of 1980–2 spurred greater com-petition for income among all workers, hence generating greater incentives

for employer and employee discrimination. The bargaining power andstandard of living of production and non-supervisory employees declined.Working-class white males pushed down the economic ladder by thesemacroeconomic 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 growafter 1973, but the rate of return to cognitive ability did not begin to increaseafter 1979. So the rising skill premium cannot be a cause of the increasingracial wage inequality.

The notion that competition will eliminate discrimination within the labormarket is little more than conservative political ideology masquerading asscience. In fact, both orthodox and heterodox economists have fashionedtheories of persistent racial discrimination where material incentives andopportunities to engage in discrimination are directly attributable to the

operation of the competitive process. In addition, several studies presentstrong empirical evidence of discrimination within the labor market. The mostsophisticated studies that claim to show no discrimination within the labormarket rely on a single test score variable (the AFQT) within one dataset.However, the AFQT over-estimates African American–white skill differences;



66 Patrick L. Mason

its predictions have not been replicated by studies that employ differentmeasures of cognitive skills, and it yields inconsistent and counter-intuitiveresults 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 yearsago affects individual labor market outcomes today (Darity, Dietrich, andGuilkey 1997, 2001). Among whites, parental status and ethnic group statushas 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 incomeand an advanced education. However, we are unable to distinguish the mannerin which class background matters. Is it because superior class position creates

an advantage in skill acquisition or is it because superior social status increasesaccess 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 providesaccess to decision makers and persons with control over resources, then classsimultaneously 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 notlessen the substantive significance of race for labor market outcomes. What

such research would suggest is that the class effect on labor demand is oneavenue through which white preferential treatment in the labor market isobtained. This, however, is an area where we need greater study.

Public policies and political action to eliminate racial discrimination withinthe labor market and within society at large must be distinct elements of anoverall egalitarian political economy. Redistributing household wealth andpublic resources so as to reduce class inequality will “as a by-product” reducesome racial discrimination in the labor market and some racial inequality insociety. However, a persistent and aggressive race-specific political agenda

must also be utilized to eliminate the material incentives to discriminate thatare embedded in the job-competition process.

Finally, there is a curiosity concerning the theoretical and empiricalresearch on race and economic processes. Regardless of the market underexamination – for example, labor, entrepreneurial, housing, health, or othermajor economic market – or the methodological approach, economists havenot sought to examine the formation of racial identity.6 All discriminationstudies start with the assumptions that racial identity is given and that there is auniformly agreed-to racial category for each individual, regardless of who

does the racial sorting. Yet, I am unaware of any modern economist whoutilizes 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 havean economic explanation for its existence. Research on the economics of




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 Deshpandegreatly 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 Black’s model should not be overlooked. Connect-

ing employer prejudices to worker search costs shows how preferences matter.Emphasizing the connection between worker search costs and the monopsonypower of firms demonstrates that exploitation (wage less than marginal productof labor) in general and discrimination in particular, is profitable to firms.

3 A convergence coefficient of 1.00 indicates that individuals obtain the precisesocial 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 0.034and 0.093, respectively, for 20–4-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 inschool) 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. Inparticular, he finds very strong school fixed effects. But controlling for these fixedeffects increased rather than reduced the racial wage penalty.

6 Darity, Mason, and Stewart (1998) and Akerlof and Kranton (1998) are workingpapers that have sought to fill this void.

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Akerlof, G. A. and R. E. Kranton (1998) “Economics and Identity,” Working Paper,Brookings Institute.

Anderson, B. (1996) “The Ebb and Flow of Enforcing Executive Order 11246,” American Economic Association, papers and proceedings, 86: 2, 298–301.

Bernstein, J. (1995) “Where’s the Payoff? The Gap Between Black AcademicProgress and Economic Gains,” Economic Policy Institute, Washington, DC.

Black, D. A. (1995) “Discrimination in an Equilibrium Search Model,” Journal of Labor Economics, 13: 2, 309–34.

Boozer, M. and C. Rouse (1995) “Intraschool Variations in Class Size: Patterns andImplications,” Working Paper, No. 5144, National Bureau of Economic Research,Cambridge, MA.

Borjas, G. (1995) “Ethnicity, Neighborhoods, and Human-Capital Externalities,” American Economic Review, 85: 3, 365–90.

Borjas, G. (1992) “Ethnic Capital and Intergenerational Mobility,” Quarterly Journal

of Economics, 107: 1, 123–50.Bound, J. and H. Holzer (1993) “Industrial Shifts, Skill Levels, and the Labor Market

for White and Black Males,” Review of Economics and Statistics, 75: 3, 387–96.Bowles, S. (1972) “Schooling and Inequality from Generation to Generation,”

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Black and White Men,” Journal of Human Resources, 33: 3, 658–77.



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Currie, J. and D. Thomas (1995) “Race, Children’s Cognitive Achievement and TheBell Curve,” NBER Working Paper, No. 5240.

Cutler, D. M. and E. L. Glaeser (1997) “Are Ghettos Good or Bad?,” Quarterly

Journal of Economics, 112: 3, 827–72.Darity, W. A., Jr, J. Dietrich and D. K. Guilkey (1997) “Racial and Ethnic Inequality

in the United States: A Secular Perspective,” American Economic Association,Papers and Proceedings, 87: 2, 301–5.

Darity, W., J. Dietrich and D. K. Guilkey (2001) “Persistent Advantage orDisadvantage? Evidence in Support of the Intergenerational Drag Hypothesis,” American Journal of Economics and Sociology, 60: 2, 435–70.

Darity, W. A., Jr and P. L. Mason (1998) “Evidence on Discrimination in Employment:Codes of Color, Codes of Gender,” Journal of Economic Perspectives, 12: 2, 63–90.

Darity, W. A., Jr, P. L. Mason and J. B. Stewart (1998) “Race, Class, and theEconomics of Identity: A Theory of Racism,” Working Paper, Florida State

University.Darity, W. A., Jr and Samuel L. Myers, Jr (1999) Persistent Inequality in the United

States since 1945, Edward Elgar, Northampton, MA.Fairlie, R. W. and W. A. Sundstrom (1999) “The Emergence, Persistence, and Recent

Widening of the Racial Unemployment Gap,” Industrial and Labor Relations

Review, 52: 2, 252–70.Goldsmith, A., J. Veum and W. A. Darity, Jr (1997) “The Impact of Psychological and

Human Capital on Wages,” Economic Inquiry, 35, 1–15.Granovetter, M. (1988) “The Sociological and Economic Approaches to Labor

Market Analysis: A Social Structural View,” in G. Farkas and P. England (eds),

Industries, Firms, and Jobs, Plenum Press, New York, 187–216.Grogger, J. (1996) “Does School Quality Explain the Recent Black/White WageTrend?,” Journal of Labor Economics, 14: 2, 231–53.

Heckman, J. (1998) “Detecting Discrimination,” Journal of Economic Perspectives,12: 2, 101–16.

Herrnstein, R. J. and C. Murray (1994) The Bell Curve: Intelligence and Class Structure

in American Life, Free Press, New York.Holzer, H. (1998) “Why Do Small Establishments Hire Fewer Blacks Than Large

Ones?,” Journal of Human Resources, 33: 4, 896–914.Leonard, J. S. (1991) “The Federal Anti-Bias Effort,” in E. Hoffman, Essays on the

Economics of Discrimination, W. E. Upjohn Institute for Employment Research,Kalamazoo, MI.

Leonard, J. S. (1996) “Wage Disparities and Affirmative Action in the 1980s,” American Economic Association Papers and Proceedings, 86: 2, 285–9.

Loury, G. C. (1977) “A Dynamic Theory of Racial Income Differences,” in A.Lemond and P. Wallace (eds), Women, Minorities, and Employment Discrimi-

nation, Lexington Books, Lexington, MA, 153–86.Loury, G. C. (1998) “Discrimination in the Post-Civil Rights Era: Beyond Market

Interactions,” Journal of Economic Perspectives, 12: 2, 117–26.Mason, P. L. (1995) “Race, Competition and Differential Wages,” Cambridge Journal

of Economics, 19: 4, 545–68.Mason, P. L. (1997) “Race, Culture, and Skill: Interracial Wage Differences Among

African Americans, Latinos, and Whites,” Review of Black Political Economy, 25:3, 5–40.




Mason, P. L. (1999a) “Male Interracial Wage Differentials: Competing Explanations,”Cambridge Journal of Economics, 23: 3, 261–99.

Mason, P. L. (1999b) “Family Environment and Intergenerational Wellbeing: SomePreliminary Results,” in W. E. Spriggs (ed.), State of Black America 1999, UrbanLeague, Washington, DC.

Mason, P. L. (2000) “Persistent Discrimination – Racial Disparity in the US, 1967–1988,” American Economic Association, Papers and Proceedings.

Mason, P. L. (ed.) (2001) African Americans, Labor, and Society: Organizing for a New

Agenda, Wayne State University Press, Detroit, MI.Mead, L. (1992) The New Politics of Poverty: The Nonworking Poor in America, Basic

Books, New York.Murnane, R. J., J. B. Willet and F. Levy (1995) “The Growing Importance of

Cognitive Skills in Wage Determination,” Review of Economics and Statistics, 77:2, 251–66.

Neal, D. and W. Johnson (1996) “The Role of Pre-Market Factors in Black–WhiteWage Differences,” Journal of Political Economy, 104, 869–95.Oettinger, G. S. (1996) “Statistical Discrimination and the Early Career Evolution of

the Black–White Wage Gap,” Journal of Labor Economics 14: 1, 52–78.Petterson, S. M. (1998) “Black–White Differences in Reservation Wages and

Joblessness,” Journal of Human Resources, 33: 3, 758–70.Rodgers, W. M., III and K. S. Armentrout (1996) “How Much Can Job Training Aid

in Narrowing Racial/Ethnic Wage Gaps: New Evidence from the NationalLongitudinal Survey of Youth,” unpublished paper, The College of William andMary, Williamsburg, VA.

Rodgers, W. M., III and W. E. Spriggs (1996a) “The Effect of Federal ContractorStatus on Racial Differences in Establishment-Level Employment Shares: 1979–1992,” American Economic Association, Papers and Proceedings, 86: 2, 290–3.

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504.



5 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 reconciliationin Australia for several months in 1997 and shares some insights about what itcould mean for future efforts in the USA to solve its race problems throughan Australian form of racial reconciliation (Salmond 1991; Council for Aboriginal Reconciliation 1994f; Council for Aboriginal Reconciliation1994h). 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 reconciliationprocess 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 racialinequality in Australia. The second section reviews the theoretical context within which one can understand the Australian reconciliation process.1 Theconcept of white privilege is described and the context that views a USA thathas pretty much run out of new ideas and viable strategies for remedying racialand ethnic economic inequality is explained. The context is one in which

racism is apparently on the rise, where racial hate is deepening (Berkowitz1999; Clayton 1999; Hate Crimes June 4 2001), and where there is a decisiveretrenchment or moving away from the conventional civil rights approaches toremedying racial economic inequality (Myers 1997a, 1997b).

The third section discusses qualitative findings obtained from talking withan important group of Aboriginal and white intellectuals inside and outside Australian universities. There is no claim that this group is representativeof Australian perspectives generally, nor even of Australian intellectualsand academics specifically, but the group does represent perhaps the best-

informed and most consciously supportive group of the educational aspir-ations of Aboriginal and Torres Strait Islander peoples. One gains a sense of atleast one boundary of thought. If the most supportive constituency rejectsparticular processes or means for achieving racial equality, then thoseprocesses 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 positioningof where Australia is, and where it might go.

The fourth section imparts some very personal insights about what it waslike to be an African American living and working in Australia. These

thoughts are far more tentative and perhaps more unscientific than the surveyor even the theoretical framework set up in the first two sections, but valuablenonetheless. Any understanding of the prospects of transferring an Australianstyle of racial reconciliation to American society requires that a researcherhold 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, AustralianIndigenous are worse off than the general population in Australia. Onmeasures of health, Indigenous infants are 4–4.4 times more likely to diebefore their first birthdays than are non-indigenous babies (Aboriginal andTorres Strait Islander Social Justice Commissioners 1997a: 204).2 Indigenousbabies are twice as likely to have low birth weights as are non-Indigenousbabies (1997a: 208). Indigenous death rates from diabetes are 12 times higherthan 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: 210–12). Aborigines are 16.5 times more likely to die in police, prison,or juvenile justice custody (1997a: 191–8). They are more likely to suffer fromalcoholism, more likely to smoke, and more likely to die from cervical cancer(1997a: 211–16).

The educational level of most Aborigines lags behind the general popu-lations 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 non-

Indigenous did (Aboriginal and Torres Strait Islander Social JusticeCommissioner 1997a: 222). A 1996 survey of students attending the Universityof South Australia showed that 40 percent of Aborigines do not complete theirdegrees compared with 16.7 percent of non-Indigenous students (Bourke,Burden, and Moore 1996). Indigenous education programs were establishedby the Commonwealth in 1969, and since then they have been the responsi-bility 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 thelate 1960s but by 1997 had risen to 7,460. Nevertheless, the participation rateis still less than that for other Australians, and Indigenous students’ successand 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 Commissioner1997a: 224). The Aborigine unemployment rate in 1994, 38 percent, far exceeds

the general Australian unemployment rate of 10.5 percent (Aboriginal andTorres Strait Islander Social Justice Commissioner 1997a: 225). The inescap-able conclusion that the social and economic status of Aborigines and TorresStrait Islanders languishes behind that of persons in developing countries.

Although they numbered approximately 1.4 million when Europeanssettled in 1788, by 1971 there were only 115,953 persons who identifiedthemselves as being Aborigines in the Australian Census. As Figure 5.1 shows,even though the number tripled in the two decades that followed, the Indige-nous 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

Thelower social and economic status of Aborigines is not only the result of currentdiscrimination but is deeply rooted in the dispossession of spiritual and landrights after the European invasion and the unequal access to resources duringthe European occupation. As one elder from the Yarralin people of NorthernQueensland tells the story:

When him got to Darwin . . . Captain Cook come up, see that old fellow sitdown makem spear there, hunting fish. And he don’t ask him. Same thing.

Ask him one bit of a story: “By Christ, that’s good land here. Yourcountry, it’s big one? Many people around here?,” he said. “Big big mob Aboriginal people. This we country. We never look whitefellow comethrough here. That’s first time you coming. We can be ready for you. Got abig mob spear. We don’t want whitefellow.” He start to hear that story.Captain Cook been hear that story. “Get ready for this, old fellow. Wemight start here.” Start to put the bullet in the magazine, start to shootingpeople, same like Sydney . . .

Captain Cook, reckoned, “I been want to clean that people right up.

That’s good country. I like to put my building there. I like to put my horsesthere. I like to put my cattle there . . .”

I know Captain Cook been a little bit wrong for these people. “This nomore blackfellow country. No more. Belong to me fellow country,” he said. . . Him been bring lotta book from Big England right here now. They gotthat book from Captain Cook from England. And that’s his law. Bookbelong to Captain Cook, they bring it Sydney Harbour. And lottagovernment got it in there from Big England.5

The elder’s story renders a poignant Indigenous interpretation of the theftof Aboriginal lands and the violence of invasion, which began whenEuropeans first settled Australia in the nineteenth century. The conditionsthat emanated from this dispossession persisted for generations to come.Former Commissioner of Aboriginal and Torres Strait Islander Social JusticeMichael Dobson characterized the pre-1967 era this way:




Prior to 1967, Aboriginal and Torres Strait Islander peoples’ lives wereregulated by the laws and policies of the states and territories. To control Aboriginal people, all states except Tasmania had established bureau-cracies 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 theProtection of Aborigines (New South Wales and Victoria). While theregimes varied from state to state, throughout Australia our lives weresubject to extensive discriminatory control and limitation. For Indigenouspeople, life in Australia was akin to life in South Africa under theapartheid policy.

(Aboriginal and Torres Strait Islander Social JusticeCommissioner 1997a: 21)

One significant and enduring legacy of an apartheid-type policy in Australiais persistent racial economic inequality between Indigenous and non-Indigenous people. Indigenous people of Australia are both less likely to beemployed and more likely to be out of the labor force than are non-Indigenouspeople. Figures 5.2 and 5.3 show unemployment rates and non-labor forceparticipation rates of Aborigines vs. non-Aborigines over the age of 14 from1971 to 1991. Clearly unemployment is higher for Aborigine males andfemales than it is for non-Aborigines, as is nonlabor force participation. The

disparity has worsened further, with Indigenous unemployment five to six timeshigher in 1991 than it was in 1971. While among males racial unemployment

Figure 5.1 Aboriginal and Torres Strait Islander population in Australia, 1971–96.

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

115,953

1971 1976 1981 1986 1991 1996

160,915 159,897

227,645

265,371

352,970




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 whitemales threatens innovative efforts to achieve racial reconciliation.

The upshot of these measures is that Indigenous Australians lag behindnon-Indigenous Australians. Some commentators have argued that as a resultof targeted anti-poverty programs during the 1980s, the racial gap in incomesnarrowed. The relative position of Indigenous Australians, this reasoninggoes, 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 statesand 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

Figure 5.2 Percentage of Australians unemployed, aged 15 and over, 1971–91.

25

20

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0

25

20

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10

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0

25

20

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0

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5

01971 1976 1981 1986 1991 1971 1976 1981 1986 1991

1971 1976 1981 1986 1991 1971 1976 1981 1986 1991

Aboriginal Males All Males

Aboriginal Females All Females%

% %

%




inequality between Indigenous and non-Indigenous groups in both Australiaand 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 urbanizedareas of New South Wales and Queensland, but it is in the rural state of

Northern Territories where Aborigines represent the largest share of thestate’s population. Little evidence of improvement in that state has beenshown in recent years. Comparing relative incomes in 1991 and 1996, Figure5.6 shows that Northern Territory Aborigines received only 41 cents for everydollar that non-Aborigines received. That figure did not change between thetwo 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 “disadvantagemodel.” That view, particularly prevalent among American and Australianneoclassical economists (Piore 1968; Viscusi 1986; Hunter and Borland 1997),

Figure 5.3 Percentage of Australians not in the labor force, aged 15 and over,1971–91.

80

60

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0

80

60

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80

60

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80

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01971 1976 1981 1986 1991 1971 1976 1981 1986 1991

1971 1976 1981 1986 1991 1971 1976 1981 1986 1991

Aboriginal Males All Males

Aboriginal Females All Females%

% %

%




posits that it is the human capital deficiencies and educational defects thatunderlie the poor market outcomes of blacks and other racial minority group

members. These deficiencies and defects translate into lower earnings, lowerincomes, higher unemployment and generally greater social and economicinequality (Myers and Sabol 1987; Daly 1992, 1993a, 1993b, 1993c, 1993d,1994a, 1994b, 1994c; Daly et al. 1993; Altman and Taylor 1994; AustralianBureau of Statistics 1994; Daly and Hawke 1994; Daly and Lui 1995; Gregory

Figure 5.4 Ratio of Aboriginal to total percentage unemployed, 1971–91.

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

Source: Gregory and Daly (1997).

5.5

5

4.5

4

3.5

3

2.5

2

1971 1976 1981 1986 1991

▲

■

▲

■

▲

■

▲

■

▲

■

▲■ Males Females

0.6

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0.4

0.3

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0.1

0USA AUSTRALIA

0.583

0.4820.505

0.555

1980

1990




and Daly 1995; Hunter 1996, 1997; Hunter and Taylor 1996; Junankar and Lui1996; Taylor and Hunter 1996, 1997; Altman and Hunter 1997; Daly and

Smith 1997; Hunter and Borland 1997; Sanders 1997; Sanders and Arthur1997; Taylor 1997). Racial inequality, in the disadvantage model, seeks thesource 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 controlsociety’s economic power. Understanding how the underclass got to be at thebottom 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 groupmembers white – as the “disadvantage” model does. Rather, it seeks toacknowledge and to confront the process by which inequality arose in the firstplace. Such acknowledgment of theft, of unfair and discriminatory treatment,of separation and forceful removal of children, and of the disproportionatenumbers of deaths among those in custody does more than ease the sorrowand despair of those at the bottom (Council for Aboriginal Reconciliation1994e; Commonwealth of Australia 1997). It squarely places the burden onthe 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 dis-advantage of those at the bottom, but because those at the top consistentlyexhibit discriminatory behaviors. These behaviors adversely affect people who

Figure 5.6 Indigenous to non-Indigenous income ratios, Northern Territory, 1991 and1996.

Source: Taylor and Roach (1998).

0.45

o.4

0.35

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0.410.41

1991 1996




are not like them generally, but provide advantages to people who are likethem 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

one’s ancestors came from Ireland, Germany, France, Syria, or NorthernIndia. What matters is that one is white. And for those surprised by themention 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. Throughoutthe 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 nobox for white. And when white Australians are asked what is their race, manytake great offense. They will insist that they are Celtic or Welsh or Irish orperhaps Mongol or Flemish or even a bit of Moor. But the word white appearsnot 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 – eitherbecause the Census says so or because the masses say so – then how can therebe “white privilege?” White privilege is understood by authors such asUniversity of Florida sociologist and race relations expert Joe Feagin (seeFeagin 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 thepower and the economic influence that permits the European settlers to claimsuch legal myths as Terra Nullius6 or to create fictional chiefs or kings. Itpermits 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 Reconciliation1994h) for a few blankets and trinkets.

These may seem like tiny quibbles with the Australian Bureau of Statisticsover failure to include a designation called “white.” But it can be a morefundamental reflection of the Australian refusal to acknowledge whitenessand therefore white privilege, which helps to explain the difficulty Parliamentnow faces in dealing with Wik (High Court decision defining native titlerights).7 If there is no white race, there can be no white privilege. How

conveniently Australians have submerged the central theoretical premise forredressing racial inequality!

The journey toward understanding racial reconciliation as a remedy toracial inequality begins by acknowledging that racial inequality is rooted in white privilege. It is in part because white privilege persists in America that




efforts to eliminate racial economic inequality have failed in the past. Pastpolicies were based on the “disadvantage” model. They sought to reducedeficiencies of blacks and other minorities without addressing racism and white privilege.8

Some Americans have embraced racial reconciliation. This was evident inPresident Clinton’s call for racial reconciliation in the USA at a time whenaffirmative action and race-based initiatives for redressing past wrongs against African Americans and other racial minority group members were andcontinue to be under attack. Racial reconciliation in the USA should beunderstood as a public policy response to the apparent failure of alternativemeans of remedying racial and ethnic economic inequality.

The attack upon affirmative action comes in three parts. The first is relatedto 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 asignificant problem (Aboriginal and Torres Strait Islander Social JusticeCommissioner 1997b). Yes, much racial inequality remains, according to this view, but that inequality is not the result of on-going racism or racialdiscrimination. Instead, it is rooted in defects within racial minoritycommunities themselves (Aboriginal and Torres Strait Islander Social JusticeCommissioner 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 affirmativeaction 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 thelast of these effects can justly be remedied by government action and race-based initiatives do not assure a remedy.

The second part of the attack presumes that even if discrimination lingersfrom the past and even if racism or racial discrimination continues, affirmativeaction does not solve the underlying problem. While efforts to promote racial

minority group representation among students in major colleges anduniversities may be well-meaning, they do not assure graduation of minoritygroup 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 PacificIslanders may be justified by their continued under-representation in manyparts of academia. It is more difficult to justify based on effectiveness inincreasing their representation. Critics of affirmative action – even those whoadmit 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 andethnic economic inequality is that these initiatives are unfair. The view is thatin a constitutional democracy, where the majority rules, any effort thatconsciously benefits a minority group – based solely on their race – at the




expense of the majority is suspect. The legal and constitutional logic of thisreasoning comes from post-Civil War Constitutional amendments prohibitingstates from passing laws that would disenfranchise newly freed slaves. Thelanguage of the equal protection clause in the Fourteenth Amendment to the

US Constitution does not speak specifically to the preferred status of one raceover another. Within the historical context of the times, however, it wasunderstood that laws could not be passed that harmed former slaves, whileleaving 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 thatcan 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 remedyingracism (Myers 1997a). The negative perspective has preoccupied most of my

writing over the past several years, and I am often accused of unfairly labelingas “new racists” honest intellectuals who believe they are merely searching foranother way. My visit to Australia has given me the freedom and theintellectual distance to see the alternative, more positive, interpretation of these movements in American society.

The positive force accompanying the unfortunate ugliness of the retrench-ment efforts away from affirmative action and race-based remedies to racialinequality is compelling policy makers to confront a need to acknowledge thedeeply rooted pain and hurt associated with prior racism and to reconcile

(Commonwealth of Australia 1997). Racial reconciliation in the USA can beseen as a positive response to the dismantling of an alternative and now largelyunacceptable form of remedying racial economic inequality. Seen from theperspective of Australians who are struggling with their Aboriginal reconcili-ation efforts,12 from the perspective of the Maori who through the WaitangiTreaty13 efforts have nearly completed their reconciliation efforts and throughthe lenses of the South African Truth and Reconciliation efforts,14 one canonly 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 thesubsequent administration. Nevertheless, examining the inner workings of theracial reconciliation process and exploring what makes it a possible alternativeremedy in the post-Civil Rights era is worthwhile.15

Australian academics’ views on reconciliation

One advantage of economics and empirically oriented policy analysis is thatthe tools of the science permit a quantitative perspective on what can be

misleading if presented only in an anecdotal way. A dedicated faculty membercan teach a lecture with 100 students and have 99 of them say they’ve beenchallenged and have learned a lot. But that one student who writes on theevaluation form that the teacher is incompetent and the worst he has ever hadcauses the teacher not to be able to sleep for a week. Similarly, after personally




interviewing dozens of Australian intellectuals and academics about recon-ciliation, the views and perceptions that resonate months later are theoutrageous views that ultimately influence and obtain the greatest mediaattention. Pessimism about the prospects of achieving true reconciliation in

Australia and of being able to translate these efforts into successful racialreconciliation in America must be replaced by cautious optimism because of research findings such as those described below. Respondents on the marginsreally do not account for the true views and underlying feelings of the majority.

Almost four dozen faculty and staff completed a survey instrument distri-buted at talks at Australian universities. The sample was almost evenly dividedbetween those who indicated that they were Aboriginal or Torres StraitIslanders and those who were not. The survey followed seminars where theauthor 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 auniversitywide diversity initiative.

The survey had seven questions. The first question asked whether acknow-ledgment of prior wrongs was a necessary condition for reconciliation. Almosteveryone agreed that it was. Of the 45 responses, 43 indicated that acknow-ledgment 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 “somewhatimportant,” 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” (seeFigure 5.8).

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

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The third question threw the researcher off balance. When asked whethercompensation 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) saidit was “not very important,” 4.4 percent (2 out of 45) said it was “not importantat all” and another 2 percent (1 out of 45) did not respond (see Figure 5.9). Theresponses were examined by the racial breakdown of the sample. This wasrevealing because many white respondents refused to be pigeon-holed into a“white” classification. Some whites contested the very idea of being called

Figure 5.8 Is an official apology required for reconciliation?

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Figure 5.9 Is compensation for prior wrongs required for reconciliation?

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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 oneprominent Australian economist who shares this view, the author learned thatmuch white opposition to compensation for prior wrongs stems from a belief that it would set an undesirable precedent. This view holds that otherdeserving groups in society might make similar claims for compensation.Women, British children brought to Australia during World War II, Chineselaborers and any number of other claimants could clog the legal system withcompensation demands. The argument against compensation makes thispoint 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 internationalstandards for redressing wrongs against subjects who have been harmed bystate actions (Commonwealth of Australia 1997; also see n. 1).

Leaving aside for a moment whether stealing Aboriginal children, rapingtheir 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 andlargely economic questions dealing with determination of the size and distri-bution of the compensation and instead seemed to dwell on why compensation

itself was undesirable. This is somewhat odd, given an economist’s training incalculations and debate, even if one disagrees with the underlying issue beingdebated. Economists ought to be able to talk seriously about who shouldreceive how much compensation and how it should be distributed andfinanced, even if they are opposed to compensation on philosophical orpolitical terms. Conversations never evolved to the interesting economicdiscussions because of the vehemence of opposition by a few to the very notionof compensation. This vehement opposition to compensation enthraled theauthor and the few hostile comments opposing compensation on the question-

naire 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 differentfrom responses of the Aborigines was tested. Much to his surprise he foundsufficient variation in the responses, even among the Aborigines, to create asizeable dispersion of results, making the conclusion that whites and nonwhites differed untenable. The same percentage of whites felt that compen-sation 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 thanIndigenous who felt that compensation was unimportant, the numbers were small. The result is that we cannot reject the hypothesis that whites’and Indigenous people’s views are about the same: that compensation is“extremely” or “somewhat important.”




There are some substantial qualitative reasons why Indigenous Australiansranked compensation as “somewhat important” as opposed to “extremelyimportant.” Many Indigenous respondents explained that it was nearlyimpossible 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 disagreementover the entire spectrum of the distribution. This is not accurate. A safemajority of whites and nonwhites largely share the view that compensation isdesirable 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 compen-

sation for the wrongs. Much work remains within the economics community toaddress some of the technical aspects of the compensation question: Howmuch? For how long? In what form of payment? To whom? These technicalquestions can be addressed while the politicians and journalists inflame usover the first two questions. Perhaps more careful thought to the technicalquestions would help extinguish the flames from a vocal minority and permitthe majority to accept compensation as both necessary and desirable.

Government authorization of $63 million dollars in 1997 to providepsychological counseling and to assist in locating lost relatives is not compen-

sation for prior wrongs. It may help repair some of the damage associated withthose wrongs, but it does not apparently go directly to the victims. Marketeconomists would argue it would be better to give the money directly to the victims – who may well choose to spend the money on psychological counsel-ing or, perhaps, locating relatives. The current scheme appears to benefit onlythe libraries, archives, location services, and psychological counselors – notthe victims. It would be extremely surprising if real economic benefits trickledown to the stolen generation from this expenditure of funds. If anything, itcreates 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 fromobservations of Australians’ recent responses to the Wik, to the StolenChildren report (Commonwealth of Australia 1997), to the funding for the Aboriginal and Torres Strait Islanders Commission (ATSIC)(1997), and tothe difficulties in proceeding with the Aboriginal Reconciliation initiative,16 itis that opponents are few but vocal. The opposition is baiting the Australian

majority and the majority is confused, because it does not see itself asprivileged. Without a theory of white privilege, the majority cannot easilyreject the flaw in the logic of the opponents. They remain silent and appear toagree with the opponents, when in fact they do not.




Transplanting racial reconciliation to America

Will it be possible to adapt this Australian model of racial reconciliation toheal 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 yearsof uncertainty and ambiguity within the Democratic leadership on thedirection of national policies on race. During his administration PresidentClinton ordered each cabinet department to prepare a report on what workedand what did not work in implementing affirmative action plans. This followeda speech in which Clinton intoned: “Mend it, don’t end it.” The “Mend it, don’tend it” policy statement was akin to his policy on gays in the military: “Don’task, don’t tell.” Its centrist tone was intended to convey to gays and theirsupporters that strict enforcement of archaic and punitive sanctions againsthomosexual acts within the armed forces would not be used to discriminateagainst people with different sexual preferences. Simultaneously it was toconvey to the Religious Right that they need not fear sending their sons intolong periods of separation from their families.17

Similarly, the “Mend it, don’t 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 theproblem of putatively unfair quotas and practices discriminatory to whites would be fixed. Just as the “Don’t ask, don’t tell” policy ran into constitutionaldifficulties, in an administrative twist, the “Mend it, don’t end it” reports nevergot produced or were never publicly released for general distribution. It isalmost as if the policy analysts in the various government bureaus, who wereinstructed to determine which affirmative action programs were working and which ones were not, mistakenly thought their instructions were: “Don’t ask,don’t tell!”

The US racial reconciliation process under Clinton was a top-downinitiative – the President’s initiative. After announcing he would create theinitiative, 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 theseven-member commission. Once the group convened, it was unable toarticulate its agenda and until recently little visible output has emerged.

One of the main fault lines of the US racial reconciliation process was thepersistent opposition from the Republican leadership to the Commission’scomposition. According to news reports, when outgoing Republican HouseSpeaker Newt Gingrich was contacted about membership of the group, whichultimately included a prominent Republican (former Mississippi GovernorWilliam Winter), Gingrich’s office never responded. Gingrich and otherleaders on the right, however, argued publicly that the President’s RaceReconciliation Council was too one-sided and that the hearings held aroundthe country were themselves a mockery of the reconciliation process because




they failed to include diverse perspectives about the race problem in America.18

What is also intriguing about the race reconciliation dilemma in America isthat 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 – eventhough they are opposed to affirmative action, to welfare, to minorityscholarships and the like – the “new right” has called for acknowledgment andapology for slavery and the wrongs against blacks. Some even recommendcompensation. Then, in this view, we will forever put the claims of blacksbehind us.

The American context is one where racial reconciliation is seen as a meanstoward 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 – actuallymay assist black communities in becoming less dependent on white Americaand 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 beblack in America and not be seen, heard, or felt. Although I am deaf, I can feelthe 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 argu-

ment when one challenges the notion that white privilege exists. Whites can bereminded, 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, whitesseem not to even see blackness. Whether blackness is that of Indigenouspeople who are the original land owners or of foreigners or visitors like me, itappears 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 acheck 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 fringeof the local marketplace and many, many Aborigine people were sleeping inthe parks, sitting on benches, and generally roaming about. Life went onalmost as if they did not exist. No Aborigines worked as clerks, secretaries or inthe service positions in the many shops, restaurants, hotels, or art galleries.

Their invisibility underscored both why they were not employed andillustrated how no one seemed to be upset about it (Council for AboriginalReconciliation 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




realize the harm they have created, no prospect for reconciliation exists. Thefirst steps towards reconciliation are acknowledgment and apology, so there ishope that through education and self-awareness whites in Australia also willrealize 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 havedone 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, socriminal, so backward?”

But in Australia, children were stolen yesterday, or at least within recentmemory. In Australia, native title to land rights claims (Aboriginal and TorresStrait Islander Social Justice Commissioner 1997b) are not remote and far-

fetched. 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 willask, “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 thedisadvantage that backward peoples share, but to the privilege that whitesinherit. Because Aborigines are now largely invisible, the eye-openers of educational and informative efforts that play a part in the reconciliationprocess 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 understandits 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 fora 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 AustralianReconciliation Convention website, http://www.austlii.edu.au/au/special/ rsjproject/rsjlibrary/car/arc/oview.htm; the Convention, The Path to Recon-ciliation: Renewal of the Nation, was held on May 26–8, 1997.

2 These figures are based on statistics from Western Australia, South Australia andthe Northern Territory, the only states that were deemed by the AustralianBureau 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 (seeGray 1997). The most obvious explanation is the under-counting of Aborigines inearlier years of the census. The 33 percent increase in Indigenous population




between 1991 and 1996, however, is related to what Gray calls “unexplained” popu-lation growth. One component of this unexplained growth is self-identification.

Another component consists of births through intermarriage.4 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 13.13percent of the Australian population. The majority of Aborigines, however, live inthe states of New South Wales and Queensland, representing 55.8 percent of allIndigenous Australians.

5 Reproduced in Aboriginal and Torres Strait Islander Social Justice Commis-sioner (1997a: 1), citing Rose (1984).

6 Australian doctrine, Terra Nullius (Latin) meaning a land belonging to no one, aland whose Indigenous people were taken to be so primitive in their socialorganization that it was, socially speaking, unoccupied (see Sharp 1996 and n.1 formore information).

7 “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 donot give exclusive possession to pastoralists and that native title rights are notnecessarily extinguished by the grant of a pastoral lease. Native title rights cantherefore 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 pastorallease 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 JusticeCommissioner (1997a: 73).

8 See Joe Feagin in his essay in Myers (1997b). These opinions change when theoption to exclude “strict quotas” is not offered. The reason political leaders wereso reluctant to embrace affirmative action in the 1990s was that these dominant

opinions of opposition to affirmative action overwhelmed the landscape.9 For government dependency views see Commonwealth of Australia (1997).

10 Pollster Louis Harris points out that although support for affirmative action hasdeclined and political leaders are vocally opposed to it, there still is – at least at thetime of his article – a slight majority that favors affirmative action (Harris 1996:49–52). The wording of the question, however, is “favor or oppose affirmativeaction – without strict quotas.” As Joe Feagin details in his essay in Myers(1997b), these opinions change when the option to exclude “strict quotas” is notoffered. The reason political leaders are so reluctant to embrace affirmativeaction in the 1990s is that these dominant opinions of opposition to affirmativeaction overwhelm the landscape. Council for Aboriginal Reconciliation (1994d).

11 City of Richmond v. J. A. Croson Co., 488 US 469 (1989). Podberesky v. Kirwan 38F. 3d 147 (4th Cir. 1994). For more details see Boston (1993) and Rice (1991).

12 In 1991, the Australian Parliament established the Council for Aboriginal Recon-ciliation, which was responsible for steering and promoting the achievement of racial reconciliation by the year 2001.

13 The Sealord purchase in the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992 provided allocation procedures for Maori fisheries’ assets.

14 The Truth and Reconciliation Commission (TRC) was established after South Africa’s transition to a nonracial democracy. Its primary purpose is to investigateacts of violence and discrimination committed during apartheid.

15 For the Post-Civil Rights era see Joe Feagin in Myers (1997b). These opinionschange when the option to exclude “strict quotas” is not offered. The reasonpolitical leaders are so reluctant to embrace affirmative action in the 1990s is thatthese dominant opinions of opposition to affirmative action overwhelm thelandscape.

16 See n. 1.




17 White House Office of Communication, “Clinton–Gore Administration: A Record of Progress for Gay and Lesbian Americans” (October 1998) White House, Officeof Press Secretary, “ Remarks by the President at National Defense University” (July19, 1993).

18 Gingrich and Connerly (1997). Newt Gingrich was speaker of the US House of

Representatives. Ward Connerly chaired the American Civil Rights Institute andis a University of California regent, a member of the governing body of theUniversity of California system.

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1996–1997 , Australian Government Publication Service (AGPS), Canberra. Aboriginal and Torres Strait Islander Social Justice Commissioner (1997a) The Fifth

Report: 1997 , Australian Government Publication Service (AGPS), Canberra,

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Title Report: July 1996–June 1997 , Australian Government Publication Service(AGPS), Canberra, http://www.hreoc.gov.au/social_justice/native_title/

Altman, J. C. and B. Hunter (1997) “Indigenous Poverty Since the HendersonReport,” CAEPR Discussion Paper, No. 127, Centre for Aboriginal EconomicPolicy Research, The Australian National University, Canberra.

Altman, J. C. and J. Taylor (1994) “Estimating Indigenous Australian Employment inthe Private Sector,” CAEPR Discussion Paper, No. 70, Centre for AboriginalEconomic Policy Research, The Australian National University, Canberra.

Australian Bureau of Statistics (1994) 1991 Census of Population and Housing. Household Sample File User’s Guide, Australian Bureau of Statistics, www.hreoc.gov.au/social_justice/statistics/index.html, Canberra.

Berkowitz, H. P. (1999, September 20) “Symposium (Analysis of Hate Crime Lawsand their Social Effects),” Insight on the News 15: 35, 40.

Boston, T. D. (1993) Meeting the Croson Standard: A Research Guide for Policy Makers,Joint Center for Political and Economic Studies, Washington, DC.

Bourke, C., J. Burden and S. Moore (1996) “Factors Affecting Performance of Aboriginal and Torres Strait Islander Students at Australian Universities. A CaseStudy,” Department of Employment, Education, Training and Youth AffairsEvaluyations and Investigations Program, Higher Education Division. www.hreoc.gov.au/social_justice/statistics/index.html#8.6

Clayton, S. L. (1999) “Learning not to Hate,” Corrections Today 61: 5, 8.Commonwealth of Australia (1997) Bringing Them Home. “Report of the National

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Relationships between Indigenous Australians and the Wider Community, Key IssuePaper, No. 2, Australian Government Publishing Service (AGPS), Canberra.

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Greater Community Response to Addressing the Underlying Causes, Key Issue Paper,No. 6, Australian Government Publishing Service (AGPS), Canberra.

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ance of Land and Sea in the Aboriginal and Torres Strait Islander Societies, Key Issue

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Indigenous Cultures as a Valued Part of Australian Heritage, Key Issue Paper, No. 3, Australian Government Publishing Service (AGPS), Canberra.

Daly, A. E. (1992) “The Determinants of Aboriginal Employment Income,” CAEPR

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Daly, A. E. (1993d) “The Position of Older Aboriginal People in the Labour Market,”CAEPR Discussion Paper , No. 43, Centre for Aboriginal Economic PolicyResearch, The Australian National University, Canberra.

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CAEPR Discussion Paper , No. 67, Centre for Aboriginal Economic PolicyResearch, The Australian National University, Canberra.

Daly, A. E. (1994b) “The Determinants for Unemployment Income for Indigenous Australians,” CAEPR Discussion Paper , No. 68, Centre for Aboriginal EconomicPolicy Research, The Australian National University, Canberra.

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Daly, A. E., B. Allen, L. Aufflick, E. Bosworth and M. Caruso (1993) “Determiningthe Labour Force Status of Aboriginal People Using a Multinomial Logit Model,”


Daly, A. E. and A. E. Hawke (1994) “The Impact of the Welfare State on theEconomic Status of Indigenous Australian Women,” CAEPR Discussion Paper ,No. 65, Centre for Aboriginal Economic Policy Research, The Australian NationalUniversity, Canberra.




Daly, A. E. and J. Lui (1995) “Estimating the Private Rate of Return to Education forIndigenous Australians,” CAEPR Discussion Paper , No. 97, Centre for AboriginalEconomic Policy Research, The Australian National University, Canberra.

Daly, A. E. and D. E. Smith (1997) “Indigenous Sole-Parent Families: Invisible andDisadvantaged,” CAEPR Discussion Paper , No. 134, Centre for AboriginalEconomic Policy Research, The Australian National University, Canberra.

Feagin, J. R. (1998) The New Urban Paradigm, Rowman and Littlefield, Washington,DC.

Feagin, J. R. and C. Feagin (1999) Racial and Ethnic Relations, 6th edition, Prentice-Hall, Upper Saddle River, NJ.

Feagin, J. R. and M. P. Sikes (1994) Living With Racism: The Black Middle Class

Experience, Beacon Press, Boston.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

White Colleges and Universities, Routledge, New York.Gingrich, N. and W. Connerly (1997) “Face the Failure of Racial Preferences,” New

York Times June 15.Gray, A. (1997) “The Explosion of Aboriginality: Components of Indigenous

Population Growth 1991–1996,” CAEPR Discussion Paper , No. 142/1997, Centrefor Aboriginal Economic Policy Research, The Australian National University,Canberra.

Gregory, R. G., and A. E. Daly (1995) “Change in the Relative Economic Status of Indigenous Males in the 1980’s: Australia and the United States Compared,”CAEPR Discussion Paper , No. 82, Centre for Aboriginal Economic Policy

Research, The Australian National University, Canberra.Gregory, R. G. and A. E. Daly (1997) “Welfare and Economic Progress of IndigenousMen of Australia and the U.S. 1980–1990,” Economic Record 73: 221, 101–19.

Harris, L. (1996) “The Power of Opinion,” Emerge, March, 49–52.Hate Crimes (June 4, 2001) America 184: 19, 3.Hunter, B. (1996) “The Determinants of Indigenous Employment Outcomes: The

Importance of Education and Training,” CAEPR Discussion Paper , No. 115,Centre for Aboriginal Economic Policy Research, The Australian NationalUniversity, Canberra.

Hunter, B. (1997) “The Potential Impact of the Workplace Relations and other

Legislation Amendment Act 1996 on Indigenous Employees,” CAEPR Discussion Paper , No. 130, Centre for Aboriginal Economic Policy Research, The AustralianNational University, Canberra.

Hunter, B. and J. Borland (1997) “The Interrelationships Between Arrest andEmployment: More Evidence on the Social Determinants of IndigenousEmployment,” CAEPR Discussion Paper , No. 136, Centre for AboriginalEconomic Policy Research, The Australian National University, Canberra.

Hunter, B. and J. Taylor (1996) “Indigenous Labour Force Status to the Year 2000:Estimated Impacts of Recent Budget Cuts,” CAEPR Discussion Paper , No. 119,Centre for Aboriginal Economic Policy Research, The Australian National

University, Canberra.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 Aboriginal Economic Policy Research, The Australian National University,Canberra.

Myers, S. L., Jr (1995) “Equity, Fairness, and Race Relations,” Emerge 6: 9, 48–52.




Myers, S. L., Jr (1997a) “Why Diversity is a Smoke Screen for Affirmative Action,”Change 29: 4, 24–32.

Myers, S. L., Jr (1997b) Civil Rights and Race Relations in the Post Reagan–Bush Era,Praeger, Westport, CT.

Myers, S. L., Jr and W. A. Darity, Jr (1998) Persistent Disparity: Race and Economic

Inequality in the United States Since 1945, Edward Elgar, Northampton, MA.Myers, S. L., Jr and W. J. Sabol (1987) “Unemployment and Racial Differences in

Imprisonment,” Review of Black Political Economy 16: 1–2, 189–210.Piore, M. J. (1968) “Public and Private Responsibilities in On the Job Training of

Disadvantaged Workers,” Working Paper, MIT.Rice, M. F. (1991) “Government Set-Asides, Minority Business Enterprises, and the

Supreme Court,” Public Administration Review, 51: 2, 114–22.Rose, D. B. (1984) “The Saga of Captain Cook: Morality in Aboriginal and European

Law,” Australian Aboriginal Studies, 2.

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1772, University of Hawaii Press, Honolulu.Sanders, W. (1997) “Opportunities and Problems Astride the Welfare/Work Divide:

The CDEP Scheme in Australian Social Policy,” CAEPR Discussion Paper , No.141, Centre for Aboriginal Economic Policy Research, The Australian NationalUniversity, Canberra.

Sanders, W. and W. S. Arthur (1997) “A Torres Strait Islanders Commission?Possibilities and Issues,” CAEPR Discussion Paper , No. 132, Centre for AboriginalEconomic Policy Research, The Australian National University, Canberra.

Sharp, N. (1996) No Ordinary Judgement: Mabo, The Murray Islanders’ Land Case,

Aboriginal Studies Press, Canberra.St Jean, Y. and J. R. Feagin (1998) Double Burden: Black Women and Everyday

Racism, M. E. Sharpe, New York.Taylor, J. (1997) “The Opportunity Cost of Future Indigenous Labour Force Status,”


Taylor, J. and B. Hunter (1997) “A Profile of the Indigenous Workers in the PrivateSector,” CAEPR Discussion Paper , No. 137, Centre for Aboriginal EconomicPolicy Research, The Australian National University, Canberra.

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in the Northern Territory, 1991–96,” CAEPR Discussion Paper , No. 156, Centerfor Aboriginal Economic Policy Research, The Australian National University,Canberra.

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6 Multiracialism and meritocracy

Singapore’s approach to race and

inequality

R. Quinn Moore

Introduction

Throughout much of the world, there has been a strong ideological attach-ment to the desirability of procedural equality. The logic runs that if the rulesare not the same for everyone, the system is simply “not fair.” However inmultiracial, multi-ethnic, or otherwise diverse societies, procedural equalityoften has come under fire when it has not yielded equality of results. “Fairmeritocracy” is an ideological attempt to reconcile these two notions of equality. Proponents of fair meritocracy argue that unjust inequality isendemic to strict procedural equality, given the inherited advantages of privileged groups. Inherited wealth, educational advantages, nepotism, andbenefits 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 thatsocieties should strive for “fair” equal opportunity in which inheritedadvantages or disadvantages are compensated for. In other words, effortsshould be made to level the playing field for all individuals before competitionbegins. The resulting meritocracy should yield what is deemed a “justlystratified society,” and simultaneously reflect both equality of results andprocedural equality. Although this approach is ideologically appealing, thereare significant obstacles to its practical application, namely the difficulty of removing the socially entrenched advantages of the privileged and thedifficulty in assessing when stratification is truly merit-based, given that anyprivileged 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 anddramatic economic growth, Singapore has maintained a strict adherence tothe ideal of a procedurally equal meritocracy, while simultaneously promotingmultiracialism as a fundamental national ideal. The struggle to maintain theseoccasionally conflicting ideals has yielded an interesting mix of policies thatseeks to sort individuals objectively while allowing racial groups to compen-sate for their perceived social and economic disadvantages. Singapore issomewhat unique in actively seeking to achieve a fair meritocracy. However,



94 R. Quinn Moore

this system is hampered by the seemingly universal problem of ethnicfavoritism and entrenched social advantage. While it would be difficult toclaim that Singapore has achieved fair multiracial meritocracy, their effortsprovide a valuable example.

The characteristics of Singapore’s racial groups

Before discussing the specifics of Singapore’s racial policy, it is useful to out-line the economic and social characteristics of each racial group and to discussthe ideological roots of Singapore’s philosophy toward race and meritocracy.

Singapore was originally inhabited by a small group of Malays engaged inagricultural pursuits. The early nineteenth century decision by the British toconvert Singapore into a port to rival Jakarta initiated a huge influx of workers

from throughout the region and around the globe. This migration has yieldeda diverse society, which has had a stable mix of 75 percent Chinese, 15 percentMalay, 7 percent Indian and a small population of other groups commonlyreferred to as Eurasians.1 This “Other” category is relatively small and hasundergone dramatic shifts in make up due to in and out migration, so thisdiscussion 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 Indiansstraddling 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, Singapore’s stated developmentphilosophy has posited that economic growth would produce improvement forall segments of the population, and with such improvement, inter-racialdisparity would eventually dissipate. However, the 1980 Census showed thatthe dramatic economic boom of the 1970s had not affected all racial groupsequally. Malays were severely under-represented in both the upper levels of the educational system and in the high-prestige, economically dynamicoccupations (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 thatMalays were not excluded entirely from the 1980s growth as Malay incomeincreased by 150 percent. In addition, Malays no longer dominate the lowest-income categories according to the 1990 Census, which shows that Malaysactually have the lowest percentage of workers earning less than S$500 permonth.4 Moreover, the Gini coefficient for Malay household income

decreased fairly significantly from 0.399 in 1980 to 0.347 in 1990, whichsuggests that Malay economic development is spread across Malays as a grouprather than within a Malay elite.5

The 1980s also saw a more significant gap develop between the Chinese and



Singapore’s approach to race and inequality 95

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 theIndian labor force participation rate, and hence the workers per household, was already the highest among all ethnic groups in 1980 and increased morethan any other group during the intercensal period.6 This suggests that the

actual gap between wages earned by Indian and Chinese workers is evengreater than the household income data suggest.7 Thus, in a society that placesgreat value on the cultivation of the elite, the Chinese are strengthening theirposition at the top of the social hierarchy and becoming increasingly dominantin the upper echelons of the economy.8

The persistence of this economic hierarchy has led to strong social stigmasand stereotypes associated with race. There is a pervasive belief that theChinese are more intelligent, hardworking, and economically astute thanother racial groups. Former Prime Minister Lee Kuan Yew, the indisputable

Singaporean leader from independence until 1990 whose opinion stillcommands considerable respect, claimed that the Chinese are a “race [withan] intense and exacting civic culture . . . [which] is conducive to economicdevelopment and commercial ability” (Lee as quoted in Tamney 1996: 102).9

In contrast, Malays are considered to be generally lazy, unintelligent, andunambitious. One cabinet member explained that poor Malay economicperformance was “the result of a feudalistic consciousness and from nothaving the spirit of hard work” (Tamney 1996: 98).10 Similarly, Lee explainedthat Hindus are the victims of a “relaxed culture that is incongruent with the

values that make economic development possible” (Lee as quoted in Tamney1996: 102). South Asians in general are considered to be overly individualisticand untrustworthy when compared with the Chinese.11

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

Household Total Chinese Malay Indian Other monthly income

1980 1990 1980 1990 1980 1990 1980 1990 1980 1990

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Below 1,000 57.6 15.9 56.9 15.6 67.7 17.0 61.6 16.5 23.2 16.61,000–1,999 26.3 27.0 27.0 25.4 26.0 37.0 24.1 28.4 15.0 20.12,000–2,999 8.6 20.1 9.1 19.6 4.8 23.4 8.1 21.6 14.6 16.43,000–3,999 3.5 13.0 3.6 13.2 0.9 11.6 3.0 13.0 13.1 11.84,000–4,999 1.7 8.2 1.6 8.6 0.3 5.6 1.3 7.4 10.6 8.9 Above 5,000 2.3 15.6 1.8 17.3 0.3 5.4 1.9 12.7 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).



96 R. Quinn Moore

Ideological basis for Singapore’s multiracial meritocracy

Because Singapore was originally made up of immigrants from diverse origins,the inhabitants had no conception of a Singaporean nation. Thus thegovernment felt that its constituents would have no loyalty to a Singaporean

state because “[there is no] deep connection with the territory or [amongpopulation groups] through a common, primordial ancestry, [or] pre-colonialpast” (Ang and Stratton 1995: 74). When this lack of national identity was viewed in the context of differing economic and social statuses of racial andethnic groups, rivalry among them, regional ethnic tension, and past incidentsof communal violence, doubt among early leaders about Singapore’s viabilityas an independent political state was considerable. 12

The key to defusing Singapore’s ethnic tension was an emphasis onmultiracialism and meritocracy. Each racial group was cast as an equallyimportant, distinct part of a nation that would strive to ensure that successcame on the basis of merit, rather than racial, ethnic, religious, or culturalfavoritism. Emphasizing that groups should maintain their distinctiveness wascrucial to the success of Singapore’s multiracial nationalism, particularly sincethere was no basis for claiming any intrinsic unity in the Singaporean popu-lation. The government decided that “rather than seeking harmony throughthe abolition of ethnicity . . . it [would] set about not only enhancing ethnicityas a primary social identification, but extend this principle to making ethnicitythe main form of sociocultural classification” (Clammer 1985: 142). In short,Singapore would become a multiracial society with the intention of preventingracial discord. This multiracialism would then become the ideal around whicha sense of nationhood could be cultivated.

However, Singapore’s devotion to meritocracy as a path to economicdevelopment dictated that multiracialism would not include any affirmativeaction or compensatory discrimination measures, despite that fact that at thetime of independence the Other/Eurasian category (then primarily British) was vastly wealthier than either the Chinese or Indians and the Malays weremuch poorer than all the groups. The ideal that each culture was an equallyimportant part of the nation and that each individual would be rewarded solelyon the basis of merit was presumably enough to unite Singapore’s disparategroups.

Given inter-racial disparity, maintaining the balance between multiracialharmony and meritocracy has required some degree of compromise. In broadterms, this compromise can be characterized using the framework of “fairequal opportunity.” The government has recognized that difference in initialor inherited conditions may prevent certain worthy individuals from risingthrough a meritocracy established by the educational system and the labormarket. In response, a set of policies has been instituted to mitigate disadvan-tages before entering the procedurally equal “playing field” of meritocraticequal opportunity.

Singapore’s fair equal opportunity is manifested in three ways. First, thegovernment allows each racial group to create a community-based self-help




group to address its cultural, educational, and social deficiencies. Second,massive government-subsidized housing projects provide people of all incomelevels with relatively similar living conditions to ensure that the rich do nothave large environmental advantages over the poor. Finally, after entry into

the “playing field” has been equalized by self-help and housing policy, theprocedural equality of the meritocracy is supposed to be guaranteed by the educational system in which success is determined “objectively” by standard-ized testing. The hierarchy established by this system is deemed fair as all enterthe social game at similar levels and all determinations of ability are uniformand, therefore, considered unbiased.

Community-based self-help organizations

Independent Singapore’s only explicit policy response to racial disparity hasbeen the establishment of community-based self-help groups for each of theprincipal racial groups. These organizations are designed to help members of a racial group overcome potential social and economic hardships through theactivities of the members of the racial group itself. Self-help groups receivefunding from private donations, automatic payroll deductions, and govern-ment matching funds up to a threshold amount. The philosophy behind thissystem is that the members of a racial group will best know what problemstheir group is facing and how to solve these problems most efficiently. By

decentralizing responsibility for the amelioration of disparity, it is alsoexpected that the development of dependency tendencies, thought to beinherent 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 the1980 Census, the government concluded that policy action was necessary, asextreme inequality could jeopardize the multiracial harmony so fundamental

to the national ideology. This should not be interpreted as an admission of aflaw in the economic system, however, since the most widely accepted explan-ation 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 toalleviate this disparity. Instead efforts have focused on encouraging Malayleaders to induce fundamental changes in Malay culture.

Pursuant to this approach, the government in 1981 allowed the Malay com-munity 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 andchanging the habits of Malay children. Accordingly, Mendaki focused ontutorial programs, scholarships, and strengthening the Islamic cultural valuesthat 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 government-sponsored required-savings social security program, to collect S$1 donationsmonthly from the paychecks of all Muslims.16 The government then agreed to

match these donations up to a certain threshold. Mendaki also was givenaccess to government staff, training, and accommodation for its tutorialprograms. Government assistance was structured carefully in an attempt toavoid the development of welfare-like dependency and to encourage Malaysto help themselves. The amount of assistance and the form that the assistancetook was to be determined entirely by the community itself. Mendaki wasmeant to improve Malay education but, more important, it was meant to instilla sense of self-reliance that would enable Malays to become more productiveand successful members of society.

Addressing persistent economic disparity without compensatory discrimi-nation allowed the government to attempt to generate greater inter-racialequality without compromising its belief in meritocratic procedural equalopportunity. Self-help policy also shifted responsibility for resolving disparityfrom the government to the racial group, effectively shifting blame for inter-group disparity away from the economic and social system.

By rejecting direct involvement, the government implicitly reinforced thenotion that the current economic order is fair, and the meritocratic sortingprocess 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 correspondsto fair equal opportunity, with one critical difference. In Singapore, non-meritocratic/unjustified disparity is not considered to be the result of inheritedadvantages possessed by the well-off. Rather it is attributed to a set of inherentdisadvantages possessed by the under-performing group, presumably result-ing from culture or some other exogenous source. Moreover, the eliminationof these deficiencies is not considered the responsibility of the government orsociety 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 periodsince Mendaki’s formation coincided with dramatic improvements in relativeMalay educational performance (see p. 101) and absolute economic out-comes. 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 welfareorganization.

Because of the seeming success of Mendakiand the philosophical oppositionto differential treatment for the components of Singapore’s multiracial





100 R. Quinn Moore

Singaporean policy was driven by survival and fear of cultural, political, andeconomic nonviability. Because Housing and Development Board (HDB)policy was a means of solving the diverse problems of eliminating Singapore’sslums, 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 ActionParty’s (PAP) plan for Singapore’s development: 87 percent of Singapore’spopulation lives in one of the monolithic high-rise HDB estates, while theremaining 13 percent live in exclusive, extremely expensive private dwellings.

While HDB policy does involve some degree of wealth redistribution, theintent is not the benevolent creation of general equality; rather the goal is tocreate 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 asense of national loyalty, and mold people into what the PAP considered to bethe ideal workforce.21

This investment did have a cost, notably the potential for the feared welfare-like dependency tendencies that the PAP believed could result from publichousing. Although the PAP did not intend HDB policy as a welfare measure, itrecognized that it could have welfare-like side effects. Thus the governmentmade a strong effort to structure HDB policy to avoid such outcomes. Thiseffort included making apartments an asset to be purchased and not a right,

differentiating quality (in terms of number of rooms) and cost, andencouraging mobility among quality levels.22 These measures were intendedto make the public housing market similar to the free market while allowingthe government to pursue the goals associated with public housing.

Public housing has had an undeniable positive effect in eliminating sub-standard housing and achieving a degree of environmental equality across racialand social groups. HDB subsidy programs have been structured cleverly toassure that all Singaporeans have the opportunity to secure housing whilethose who do not need subsidies do not receive them. In addition to the subsidy

provided on all apartments purchased directly from HDB, subsidized loansare available for both direct and open market HDB purchases.23 Low-incomefamilies have access to HDB rental subsidies, and subsidized 3-room apart-ments.24 All programs have household income ceilings, and most require thatapplicants apply with their family nucleus and not own any other privateproperty.25 No person can receive more than two housing subsidies in theirlifetime.

These programs seem to be having their desired effect as HDBs haveattracted 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; 92.3percent of Malay households own their homes today while fewer than 50percent did in 1980. Malays do tend to have larger families and live in smallerapartments (Table 6.2), but the increase in home ownership is nonethelessindicative of the success of HDB policy.




In addition to providing the opportunity for secure housing, HDB estatesare racially integrated. HDB policy requires that each building be no morethan 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 enclaveand housing unit sales to the over-represented group are restricted.27 Thisintegration ensures that people of all racial groups and economic classes growup in relatively similar environments in terms of housing quality, servicesprovided, cultural opportunities, and, to a lesser extent, primary schoolquality.28 If one believes in the primacy of nurture over nature in humandevelopment, this environmental equality is perhaps the most importantmeans of leveling the societal playing field. The leveling effect seems evenmore powerful when this system is compared to other countries (the USA,

Brazil, India, etc.) where disadvantaged groups tend to live and remain indeteriorating, service-deficient, crime-ridden neighborhoods.

The educational system

After the proverbial playing field has been leveled by ethnic self-help groupsand the public housing program, the educational system ostensibly streamsindividuals to the appropriate socio-economic position by objectively assess-ing their level of merit. The educational system is the primary engine driving

Singapore’s meritocratic sorting process. The other fundamental nationalideal, multiracialism, is also deeply imbedded in the system, since schooling isthe means of establishing multilingualism and insuring that the appropriate“cultural ballast” is imparted to all citizens. Although establishing a fair merit-ocracy and a harmonious multiracial society have been constant underlyinggoals of the educational system since independence, it is questionable whether

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

HDB Flat 69.5 83.2 72.0 96.6 56.1 83.7 43.2 57.7 1 and 2-room 20.7 8.0 30.6 7.1 21.4 12.6 8.5 4.8 3-room 33.3 33.7 32.7 49.7 21.8 31.5 18.0 19.1

4-room 11.5 27.3 7.6 30.4 10.2 25.0 10.3 18.3 5-room 2.8 13.5 0.6 9.3 1.2 13.6 5.2 14.7

Other 1.2 0.7 0.5 0.1 1.5 1.0 1.2 0.8Private houses and flats 11.3 12.3 2.6 1.6 13.2 10.6 46.4 34.3Othera 19.1 4.5 25.4 1.8 30.7 5.7 10.4 8.0

Persons per household 4.8 4.2 5.5 4.7 4.3 4.2 3.8 3.8Ownership rate 61.9 87.5 49.7 92.3 42.2 80.9 57.2 74.8

Source: Department of Statistics (1994b: 21); Department of Statistics (1992: xiv, 63–7).

Notea Includes shop houses, zinc roof houses and other types of housing.



102 R. Quinn Moore

these goals have been met. As a result of certain structural inequalities in theeducational system and a general social bias toward the Chinese, Chinesestudents seem to enjoy an educational advantage that contributes to theirdisproportionate economic success.

Streaming exams and pass rate differences

The government has used the educational system to foster multiracialismthrough multilingualism and to instill a national ideology through a standard-ized state-approved curriculum. However, Lee also saw education as anavenue towards establishing an ideal economic culture where the talented andhard-working were to be identified, carefully developed, and given the incen-tive to achieve maximum production. A very strong emphasis was placed

on cultivating an elite, since it was felt that these individuals would leaddevelopment.

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 20percent were identified as the elite, and sent on to the academic stream wherethey could be molded into economic and political leaders.29 The remainingstudents 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 3–5 years of primaryschool, the O Level (and N Level for lower-stream students) after secondaryschool, and finally the A Level after the pre-university stage. These examsplace students in a stream deemed appropriate to their intellectual level. Thusthey ostensibly allow schools to cater to students’ specific needs and keep themin the educational system longer. In addition, they allow the government tofocus disproportionate educational resources on the students identified as thenation’s elite at an earlier age.30 Elite-oriented funding continues at all levels

of the system and is particularly concentrated on tertiary education, whichis, for practical purposes, available only to those initially channeled to thehigh streams.

Study of streaming exam pass rates illuminates many characteristics of theeducational system and of Singaporean society. The most glaring feature is thepattern of stark differences in pass rates by race (Table 6.3). 31 The O Levelpass rates are particularly disturbing, since they show that 91.6 percent of Chinese students qualified to move on to pre-university or a polytechnic, whilenearly 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 thatgenerated a rise in PSLE pass rates in 1991 generated a fall in the O Level passrate in 1995. Moreover, these results show only overall qualification for




secondary school (with the PSLE) and pre-university (with the O Level). Theydo not show the stream students are tracked into within an educational level.This is significant because the educational system is specifically designed toprovide a higher-quality education for high-performing students, which mayexplain why a rise in PSLE rates does not necessarily later translate into a risein O Level pass rates.

Sharply unequal inter-racial performance on streaming exams ultimatelymanifests itself in the tertiary level of the educational system, where Chinese

students are grossly over-represented. In 1990, Chinese students constituted90.4 percent of the university population while Malays and Indians made up3.5 and 4.8 percent, respectively (Department of Statistics 1993b: xvi).32 Sinceuniversity graduates earn 227 percent more than upper secondary graduates(Department of Statistics 1993a: 19), the over-representation of Chinesestudents in the university undoubtedly will continue to have negative effectson the future inter-racial distribution of income.

Explanations

In a fair multiracial meritocracy, the premise is that a social hierarchy isnecessary and desirable. Fairness does not lead to egalitarianism but to what isbelieved to be a justly stratified society. Thus, the educational system’s focuson the cultivation of the elite must, for the moment, be taken as a necessaryand correct policy. Since stratification is the goal of the educational system,the real question in assessing the success of sorting mechanisms from theSingaporean perspective is: “Does the system assess merit fairly andobjectively, regardless of class and ethnicity?” If the answer is “no,” the

implications go far beyond the educational system, casting doubt on whetherthe Singaporean economy is truly fair, multiracially oriented, or meritocratic.

Evidence presented in the previous section showed that the Chinesesignificantly outperform Indians and Malays in streaming exams, resulting inChinese over-representation in tertiary education. These differentials could

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

Race PSLE 3 O Levelsa 5 O Levelsb

1987 1991 1995 1987 1991 1995 1987 1990 1993

Chinese 89.7 92.9 97.4 90.0 91.5 92.9 86.9 89.2 91.4Malay 70.7 75.3 90.1 78.2 79.8 75.6 44.1 55.5 65.6Indian 80.5 81.3 90.9 81.9 82.4 85.1 55.5 63.7 74.7Other 88.3 84.4 95.5 85.8 83.9 86.9 66.5 75.1 81.2

Source: Ministry of Education.

Notesa 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.



104 R. Quinn Moore

be explained using Lee’s distasteful genetic arguments or, more logically, bythe environmental/nurture argument that well-educated, more affluentparents 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 ratherthan inherited advantage or disadvantage.The environmental argument is undoubtedly a part of the explanation for

disproportionately high Chinese education performance given the system’semphasis on early streaming. However, there are other structural character-istics of the educational system that favor the Chinese and the relatively rich,including the extra educational opportunities available to the affluent, thetrend 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 advan-tages available to the rich. Although these advantages are not unique toSingapore and, indeed, may be a universal social characteristic, they are worthmentioning since they affect the extent to which the system is truly fair andmeritocratic. Since the Chinese on average are disproportionately moreadvantaged than Malays or Indians, and these advantages have implications

for the racial distribution of opportunity.One of wealth’s tangible educational advantages in Singapore arises from

the emphasis on private, extra-curricular tutorial services. Because the educa-tional system has become so competitive and economic success is almost wholly determined by educational success, there has been an ever-increasingdemand for extra instruction outside of school. Private tuition is so commonthat it is now almost expected. In securing high-quality tuition, the rich have anobvious advantage – money – that gives their children an advantage in schoolperformance. 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 familiesto send their children at no or low cost.

Another serious educational advantage of wealth comes from insufficientuniversity places and the increasing trend toward reducing educationalsubsidies. The first advantage is explained simply. There are more qualifiedstudents than positions at the national universities, particularly in high-payingfields.33 The high achieving students that are turned away are faced with threeoptions—attend one of the considerably less prestigious Polytechnics, attend

the Singapore Institute of Management (a new, small private university), orleave Singapore. The third option is quite popular as 34 percent of alluniversity students are studying outside of Singapore, the vast majority of whom are Chinese.34 Since there is no public assistance for overseas or privatestudy, these options are available only to the rich. Given the substantial




financial reward for university education, an insufficient supply of universityplaces is a serious problem and a serious disadvantage for those who cannotafford 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 andbringing fees closer to the actual cost of education. As with housing, govern-ment subsidies to education were never intended as a form of welfare. Insteadthey were meant as a means of achieving national goals and increasingproduction to the point that subsidies were no longer necessary. Because of the high returns to university education, the government has decided that thetime is right to reduce subsidies and increase university fees. The argument isthat it is unfair for those who are going to be making the highest incomes toreceive a subsidy financed by the general taxpayer. This sound argument has

even greater validity in the context of a multiracial society where most of thosetracked into the universities are affluent Chinese.

The problem with this otherwise logical trend comes when poor studentsmake it through the system and are faced with these new, higher fees. Tomitigate this, the government has set up a Tuition Loan Fund that defersinterest payment until after graduation, but these loans cover only 50 percentof fees at maximum. The rest of the fees and expenses usually come frompersonal funds, private loans, or loans from the family’s CPF account. Thesesources are likely to be negligible or non-existent to poor families. However,

self-help group loans and bursary programs and other loan sources haverecently emerged as an encouraging response to this problem.

Advantages specific to Chinese students

In addition to being disproportionately rich and thus receiving a dispropor-tionate amount of the advantages of the educational system associated withaffluence, the Chinese have two other unique advantages in the educationalsystem, namely the Special Assistance Plan (SAP) and the stereotypes

associated with being Chinese in Singapore. The SAP is the only exceptionmade to equal treatment of the races in the educational system. Established in1980, the SAP converted some secondary schools into very prestigiousbilingual Mandarin and English schools that place a strong emphasis oninstilling Chinese culture. The schools are extremely well funded and acceptonly the top 8 percent of Chinese performers on the PSLE.

The existence of elite Chinese schools enhanced Malay and Indian fears of aculturally Chinese, rather than a multiracial, Singapore. As a part of theengine of meritocracy, SAP schools also call into question the inter-racial

fairness of the educational system, particularly within the context of anexplicitly elitist educational system. It is very difficult to justify differenttreatment of the academically elite Chinese from elite Indian or Malaystudents, particularly in a multiracial meritocracy. SAP schools are not evenbilled as “separate but equal,” as the SAP schools are unarguably better



106 R. Quinn Moore

funded and more prestigious than regular schools. Moreover, similar Malayand Tamil schools were not created.

The other advantage enjoyed by Chinese students is that of the positiveChinese stereotype in Singapore. As noted above, the Chinese are generally

considered to be intelligent and hard-working, a fact that undoubtedlyprovides 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) providesexamples of the salient effects stereotypes have on educational opportunities,such as scheduling high-level courses at the same time as mandatory Malaylanguage courses, thus forcing Malay students to take lower-track coursesregardless of their scores. Although it is difficult to assess the extent to whichthese stereotypes affect treatment of Malay students, their effects cannot be

dismissed. Malay students have a different “starting line” in the eyes of edu-cators, 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 beendescribed, we can evaluate the question at hand: “Does the Singaporeanmultiracial meritocratic system sort individuals fairly and objectively solely onthe 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 Singapore’s efforts at creating a fair multiracialmeritocracy altogether, it is necessary to place the educational system in thecontext of Singapore’s 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 theobvious shortcomings of the educational system are mitigated, at leastpartially. Public housing, particularly since HDB complexes have been raciallyintegrated, serves to counter many of the environmental advantages of the

wealthy. Although the wealth and education level of the parents assuredly hasan effect on their children’s performance, most children are raised in verysimilar physical environments as a part of a very diverse community. Childrenof poor, less-educated families are not isolated in deteriorating neighbor-hoods to the extent that they would be in the USA, Brazil, or virtually anyother country in the world. Rather they live in well-integrated, well-maintained, well-served communities.

Self-help groups also counter the inequalities of the educational system byproviding tutorial programs, extra-curricular academic and social activities, as

well as education bursaries and loan programs. It is difficult to assess theeffectiveness of these programs, but it is perhaps not coincidental that Malaystudents have been closing the sizeable PSLE score gap since the mid-1980s,shortly after the establishment of Mendaki. Both Malay and Indian PSLE passscores began to converge with Chinese scores since the early 1990s, shortly




after the expansion of self-help group policy. If this convergence continues inthe PSLE and extends to the upper streaming exams as minority high scorersare tracked into higher streams, the educational system could have a verydifferent face in the coming years, provided that CDAC’s funding does not

give Chinese students an additional advantage.Of course, there are still serious flaws in the fairness of the educationalsystem. Self-help groups and housing policy cannot compensate for all of thesystem’s inequities, nor are these policies without inequities of their own.Racism and the advantages of being rich have impeded and will continue toimpede the truly fair functioning of Singapore’s meritocratic sorting process.

But is there anywhere where wealth and race do not affect levels of successand opportunity? It seems unlikely. Singapore is no exception, but it hasproved 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 USA’s half-hearted attempt at affirmative action and grossly inequit-able educational system, Malaysia’s failed attempt at generating equality of results through racial preference, and other unsuccessful or nonexistentattempts to redress racial inequality, Singapore’s flawed efforts at creating afair multiracial meritocracy begin to look more impressive.

Notes

1 This diversity is multiplied greatly by extensive diversity within each group. TheChinese population is about 30 percent Hokkien, 17 percent Teochew, 15 percentCantonese, 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 thename, the small Eurasian group consists of the eclectic group of Portuguese,British, Arab, South-East Asians, and mixed-race individuals that used to bereferred 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 andreligious lines. An exploration of Singapore’s religious and linguistic hierarchy

also would be useful; however, since the focus of government programs andpopular 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 bothChinese and Indians (Department of Statistics 1993b: xv).

4 See Department of Statistics 1992: 69–78. Table 6.1 does not show the under $500per month category because the 1980 Census did not report income by race andthe 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 to0.423, 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 Statistics1993b: xvi). The drop in Malay labor force participation makes their rise inhousehold income even more impressive.

7 Income per worker is available in the 1990 Census, but it includes nonresidentmigrant 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 the1990 Census reports, which provide categories up to $7,000 per month. Thesetables show that the proportion of Chinese households increases in eachascending income category (Department of Statistics 1992: 69–78). The 1980Census 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 basedon genetic superiority. This belief has manifested itself in several eugenicsprograms (Tamney 1996), led to the dysfunction of numerous ostensibly race-neutral policies and is undoubtedly a source of economic discrimination againstMalays 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 theseriots 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 late1960s, soon after Singapore separated from the Federation of Malaya in 1965 (seeTan 1995: 343).

15 For a more complete discussion of Mendaki’s history and current projects seetheir web site ( Mendaki 1999). Information in this discussion was also drawn fromLi (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 thatresponsibility for the free tertiary education program, a relic from the Federationof 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 TuitionFee Subsidy. Instead of giving free education to all Malays, this subsidy pays 100percent of fees for families whose monthly income is below $2,000 and 70 percentof fees for families whose monthly income is between $2,000 and $3,000 ( Mendaki1999). This transfer represented the next step in eliminating perceived Malaydependence and in fostering community responsibility. It also allowed the govern-ment to shed itself of a pre-independence political anachronism that had becomeincreasingly expensive with growing Malay tertiary enrollment

18 For example, SINDA’s total budget in 1997 was S$5,529,511, of which 59.6 per-cent 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 importantfunction of self-help groups in terms of alleviating future disparity, serves as agood point of comparison. CDAC’s educational program revolves around itsseven Student Service Centers (SSCs), all established between November 1993

and November 1996. These centers now serve 12,695 student and offer arts andcraft classes, planned outings, homework clinics, and tutorial programs at alllevels in all subjects. In addition to the SSCs, tutorials are available at publicschools for those who are failing or nearly failing a subject or for those whosehousehold monthly income is less than $2,000 (CDAC 1999). Neither Mendakinor SINDA have SSCs. The tutorial programs offered by Mendaki and SINDA,




which are comparable to CDAC’s school-based tutorial program, serve 9,500 and2,800 students, respectively. It is both impressive and suggestive that in three

years CDAC established the facilities to serve more students in its SSC programalone than even Mendaki, which has conducted tutorial programs since 1981.

20 For further discussion of the political reasoning behind HDB policy, see Hill and

Lian (1995).21 HDB policy offered a solution to the lack of inherent national loyalty byfacilitating the purchase of a home. The government felt that “if one owns an assetin 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 capitalformation. An efficient way to encourage this discipline was to encourage thepopulation to place itself in debt to the government (Tremewan 1994: 58; Hill andLian 1995: 121). This long-term financial commitment also ensured a strongincentive to seek and maintain full-time wage labor. After all, “the painless roadto 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 creatinga 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 effecton worker attitudes.

22 Hill and Lian (1995: 135).23 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 besold 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 recentlybuilt 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. Theaverage HDB selling price for new flats ranged fromS$137,900 to S$158,500 for 4-room flats and from S$233,500 to $270,300 for 5-room flats (HDB InfoWEB1999). A much smaller subsidy is available for open market purchases. Thissubsidy is set at S$39,000 for families or S$49,000 for families using the subsidy tomove near parents or children. In addition to these subsidies, loans are availableup to 80 percent of the purchase price (HDB InfoWEB 1999).

24 Three-room flats are being phased out by HDB, as no new HDB estates have 3-room flats. The subsidized 3-room flat program involves HDB repurchasing 3-room flats on the open market and then reselling them to low-income families at asubsidized rate.

25 With the exception of low-income programs, the household income ceiling is setat the relatively high rate of S$8,000 per month. This ceiling applies to familiespurchasing flats on the open market as well.

26 There is also a requirement that no neighborhood be more than 84 percentChinese, 22 percent Malay or 10 percent Indian and Eurasian.

27 See Lai (1995: 122). The restriction operates by allowing members of the over-represented group to sell their housing unit to anyone, while members of the othergroups can sell only to the non-over-represented groups. Thus the ethnic make upis not permitted to worsen. The policy structure can make it more difficult forminorities 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 housingquotas also serves to break up the minority electorate and also could be seen aspart of a government effort to prevent the development of a Malay-led oppo-sition. See Tremewan (1994: 143) for further discussion of the government stancetoward minority opposition.

28 Location is one of several factors that play a role in determining which school achild 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 highestscores in math and science, followed by Indians and then Malays. Since these

subjects are the focus of the educational system and become increasingly more soas students progress, pass rate gaps may illuminate significant skill differentialsbelied 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 Singa-pore are over-represented in the much less prestigious Arts and Social Sciencesfaculty. 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: WesternConcepts/Asian Cultures,” SOJOURN , 10: 1, 65–89.

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 1990’s, 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 ContemporarySingapore,” in Gary Rodan (ed.), Singapore Changes Guard: Social, Political and

Economic Direction in the 1990’s, 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, 20:3–4, 141–55.

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.

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Spoken and Education: Statistical Release 3, SNP Publishers, Singapore.Department of Statistics (1993b) Census of Population 1990: Economic Character-

istics: 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.




Li, Tania (1989) Malays in Singapore: Culture, Economy, and Ideology, OxfordUniversity 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 Singapore’s Soul: Western Modernization and

Asian Culture, Walter de Gruyter, Berlin.Tan, J. (1995) “Joint Government–Malay Community Efforts to Improve Malay

Educational Achievement in Singapore,” Comparative Education, 31: 3, 339–53.Tremewan, C. (1994) The Political Economy of Social Control in Singapore, St Martin’s

Press, New York.

Shantakumar, G. (1992) “Student Loans for Higher Education in Singapore: SomeObservations,” Higher Education, 23, 405–24.SINDALink (1999) <A HREF=”http://www.sinda.org.sg/intro.htm”></A>Vasil, R. K. (1995) Asianising Singapore: The PAP’s Management of Ethnicity,

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Singapore, Maruzen Asia, Singapore.



7 Recasting economic inequality

Ashwini Deshpande*

Introduction

Insights into the economic features of the Indian caste system, in its changingmanifestations from the ancient through the colonial to the contemporary,come primarily from the vast pool of research that has been undertaken bysociologists, historians, political scientists – almost all social scientists excepteconomists. One would have expected economists to seize upon the uniqueeconomic features of the system as tools for theoretical modeling or as thesubject matter for empirical work to examine the continuing relevance, orotherwise, 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 contoursof 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 tomention gender and class, are all very important descriptors of inter-groupdisparity. I focus on caste because of the enduring relevance of caste categoriesin contemporary India, and the presence of caste-based affirmative actionpolicies enshrined in the Constitution of independent India. Also, while caste

is conventionally associated with Hinduism, all major religions in India exhibitfeatures of caste divisions. In other papers (Deshpande 2000, 2001a, 2001b), Iexamine empirically the economic aspects of caste inequality in independentIndia. This companion study critically reviews the existing economic literaturethat 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 asser-tions while defining the contemporary nature of caste inequality. The validityof these propositions is not always apparent on the basis of evidencepresented. For instance, Mayer (1996) asserts that “All this has meant ageneral 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 istrue that occupational structure has over time undergone a profound change,the caste divisions have remained more or less the same. Additionally, thepost-independence Constitution guarantees each Indian the freedom of

choice of occupations. Without fear of contradiction, one can uphold thisstatement for several castes; the erstwhile warrior castes will not necessarilychoose 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 notcontingent upon one’s caste.

However, at a deeper level, to gain insight into the nature of change in thecaste system an investigation into ancient occupations that have survivedchanges in economic structure ( i.e. priests in temples, scavengers, traditional

moneylenders, and the whole spectrum of agricultural jobs) is required. Arethese 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 structurerandomly distributed across castes? It is likely that we may find morecontinuity than change.

What happens to those who are released from traditional jobs because thoseoccupations are vanishing? Is it true that lower castes tend to get absorbed intolower-paying and less prestigious modern occupations and higher castes getconcentrated 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 thisdichotomy: “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 andoccupation 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 economicopportunities or the “push” of economic deprivation compel caste members to

seek other jobs? This issue is additionally complicated by the gender angle. InDeshpande (2001b) I discuss how the responsibility of preserving traditionaloccupations often falls on women while men seek alternative employment. Inthis case, the contemporary situation could be regarded as a permutation of anearlier caste structure where the link between caste and occupation may bestrong for some castes, weak for others, but the association between caste andstatus – or, more correctly, between caste and privilege – persists. Thecumulative advantage of the upper castes has been so strong that they nolonger need an institutional structure of hereditary reservations in order to

perpetuate their privilege. An economic investigation into the castecomposition of the occupational structure can contribute to an objectivepicture of the nature and degree of change.

Caste as an institution has several other facets that standard of livingindicators 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, itcan be argued that caste is irrelevant. However, in a society in whichuntouchability has been formally abolished for half a century, this should bethe 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 shapingthe 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 mostdespicable menial jobs, the Ati Sudra or the former “untouchables”.

The operative category that determines the contemporary social code,however, is the Jati. There exist 2,000–3,000 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 existand thus it is not unusual for a given Jati to claim a coveted Varna status nor forthis claim to be disputed by other Jatis.

Since caste divisions are not dichotomous, the meaning of caste inequality isnot obvious analytically. Are we advocating pair-wise comparisons, technicallypossible for the Varnas, but quite mind-boggling for the Jatis? And, for theformer, if people report the Jati as their caste, then we are left with theherculean task of unraveling the complexity of the web of relationships

between individual Jatis and their Varna counterparts. Or, are we making aplea for forcing a hierarchical ordering of the Jatis based on an economiccriterion 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 byfocusing on the sharpest contradiction, between those at the top and those atthe 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 threebroad 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 theconvenience of making pair-wise comparisons. Its weakness lies in under-

estimating the relative disadvantage of the SCs since the “Others” is a verylarge, heterogeneous category containing a whole range of castes, includingcastes that are socially and economically not necessarily very distinct from the




SCs. If empirical studies establish inter-caste disparity between SCs andOthers it is reasonable to infer an even greater disparity between castes at thetwo 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 issilent on the question of inter-group or inter-caste disparity.4 The other streamfocuses 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 wouldbenefit 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 fromstatistical discrimination to Leontief-style input–output modeling. I will makea 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), suggestthat changes in the field of development economics since the 1960s can besummed up as broadly constituting three traditions – planning, the Insti-tutionalist tradition, and the Chicago School. The “economics of rural organi-zation” can be seen filling the gap between the latter two competing traditions, within the overall neoclassical tradition. Becker’s work on discrimination is alegendary 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 castesystem.

Akerlof (1984) provides, within a modified Arrow–Debreu framework, anexplanation 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 discussesdistortions to the Arrow–Debreu framework by the use of indicators whichowe their existence to social convention. This is to be distinguished from theChicago School that explains discrimination by a “taste for discrimination”

(Becker 1971: 14). An individual X will discriminate against Y simply becausehe 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 someperson instead of others,” emphasis in the original (1971: 14).6

In the Akerlofian statistical discrimination, all members of a given group




(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 theirrespective 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, Akerlof’s model demonstratesthe 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 explainracial disparity – identity is seen as a set of characteristics attributed to anindividual 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 theseassessments are formed. Are they based on averages that the group is pre-sumed 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 aboutthe group frequency distribution and the true group frequency distributionmay differ widely. This difference would be driven by prejudice, but theimperfect 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 wholerange of questions that are left unanswered. Why are the attitudes of the uppercastes towards the Dalits derogatory? Are they due to the fact that the Dalitsare genuinely “inferior”? If Dalits acquired superior human capital indicatorsover time, would these attitudes change accordingly? Why are the uppercastes “superior” anyway? Is it due to their inherent characteristics, or to asocial 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 overlookconflicting social prescriptions. Social prescriptions are defined by the authorsas “what actions are . . . appropriate” and function as “powerful motivations tobehavior” (1998: 1). Are social prescriptions an aggregate of individualprescriptions? Are there dominant prescriptions of privilege that determine what social codes or norms ought to be? This is the classic problem of inter-personal comparisons.

Then comes the question of the identity A would like to possess, versus theidentity 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 issuethat Akerlof and Kranton (1998) address, in adopting a deviant behavior interms of the prevalent social code, he or she may be acting true to their self-




perceived identity. Here we are entering a grey area. Rebellion and protesttake a myriad forms – almost all forms are “socially” unacceptable, althoughthe degrees of unacceptability vary with the particular form.

Continuity and change

In the Akerlof (1984) model, while there is a theoretical possibility of an anti-caste coalition succeeding in breaking free of the code, this possibility falls victim to the free-rider problem. Akerlof writes “usually the greatest rewardsgo to those who do not break social customs . . . the models of statisticaldiscrimination and caste explain why economic rewards may follow those whofollow prevailing social customs.” Lal (1988), in developing an economicrationale for the Hindu social system, uses essentially the Akerlofian

argument (indeed, his model is a variant of the Akerlof model) to explain therelative stability in the caste system.8

One can see other more powerful disincentives to the formation of such acoalition: prejudice and the desire to perpetuate their domination and thepower to prevent such a coalition on the part of the upper castes, coupled withfear 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 itssupporters. This support could either be forced because of fear of reprisal, orgenuine, due to a mistaken fatalism. This formulation ignores huge chapters

of India’s history that is replete with social reform and religious protest againstthe caste system (see Deshpande 2001b for details, of the Bhakti movementthat started in the eighth–ninth 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 thata strong caste consciousness prevents the formation of a class consciousness.

In general, if construction of identity flows from a set of presumed charac-teristics, then can social change come if subjects of discrimination acquire thesocially desirable characteristics (assuming, of course, the highly unlikely

possibility that a well-formulated consensus exists on this)? Or would victimsof discrimination have to resort to protest (perhaps violent)? Can either legalreform or external force (or both) be agents of change? We would like to knowhow the Akerlof (1984) equilibrium would change if the indicators for theDalits improved over time.

The Akerlof model assumes a market setting. But Scoville’s exercise (1996:385–6) exercise looks at caste as a “system of human resource allocation asone alternative to reliance on market mechanisms,” arguing that this is asituation 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 Akerlof’s work focuses on the existence of a caste-ridden equilibriumeven under competitive conditions, Scoville’s (1991) paper is concerned withthe “production and distribution workings of such a caste economy, much in




the fashion of Leontief, and with equilibrating adjustments taking place in thesize of several castes” (1991: 49). Scoville (1991) constructs a “Jajmanimatrix” capturing some of the reciprocal obligations of the caste system.9 Theuse of reciprocity has connotations of fairness or a fair exchange. The question

of production of surplus and who (which castes) appropriates it is completelyoutside the purview of this model, as is the hierarchy and the exploitationinherent in the caste system.

A basic assumption of Scoville’s (1991) model is that demand for mosttraditional goods and services is primarily driven by population. This ignoresthe 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 adequateclothing, yet an increasing number of textile mills are closing because of a lackof sufficient demand for basic types of cloth. The dynamic version of the model

focuses on population growth of different castes as a driving force behinddetermining the elements of the matrix. While population growth isundoubtedly important, it is difficult to be persuaded that it provides the keydynamic behind the matrix – assuming of course, that such an exercise canadequately capture the essential features of the complex network of relation-ships structuring the caste system. Population growth in Scoville’s (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 agespecific 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 relation-

ships or the “absence of institutional change” (Scoville 1996: 390) where, interms of his earlier model, institutional change is defined as the change in thedefinitions of the rows/columns or changes in the elements of the Jajmanimatrix. Scoville identifies three characteristics of labor market barriers thatensure that institutional change in the caste labor market will be minimal ornil. However, his matrix is based on traditional occupations; in the modernoccupational structure, heredity plays a much smaller direct role (in the sense

of directing the exact profession that will be chosen by a given individual) andlabor market barriers work differently.

In general, unless a change is fundamental and complete, are we toconclude that there is no change at all? How does one assess change that takesplace in degrees? Reservation of electorates for SCs and STs has led to thepresence of low-caste legislators in decision making bodies that were historicallythe preserve of the upper castes. By law, untouchability has been abolished.Some have chosen to break the traditional association between caste andoccupation. 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 untouchabilityare reported (and several others go unreported); ghastly crimes against Dalitscontinue on grounds of their caste alone. How does one characterize the wholepicture? Scoville’s model does not allow us to answer this.10




Caste and patronage

Platteau (1992) attempts to tread a completely different path by exploringcaste relationships as a system of “aristocratic patronage”, where relationsbetween upper and lower castes have elements of patronage.11 He realizes and

admits that the Jajmani system cannot be equated with patron–client rela-tionships but feels it contains such elements. An untouchable’s dependantsmay have hereditary relationships with several members of upper castes(several generations of a given untouchable family work for correspondinggenerations 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,Platteau’s (1992) system assumes very stable relationships, blocking thedevelopment of competition and formalizing a stable heirarchical schemebased on servitude and coerced labor. The instrument of patronage in themodels is the provision of land plots to the untouchable clients to ensurecompliance and docility. While social insurance to the clients does exist inIndia, 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 existsa very high degree of landlessness among the SCs that this model does nottreat. Platteau’s paper models caste relationships as an informal system of indentured servitude. The Jajmani system is far more complex; in addition toland-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 themfocuses on, Platteau’s work is totally opposite to that of Scoville (who does notconsider land-based production at all).

Despite these serious limitations, Platteau’s paper does address the link

between land ownership and caste status. This is an important facet of casteinequality. His models suggest that radical land reform would destroy the rootof the untouchables’ dependence on their upper-caste landowning masters.The long unfinished agenda of land reform in India could provide a clue toone of the important causes of the perpetuation of caste inequality in therural areas.12

This still leaves open the issue of low-caste status and consequent discrimi-nation that stems from traditional menial jobs. In Platteau’s (1992) dynamicmodels, the Jajmani system does not turn out to be robust in the face of anumber of changes. A weakening or even the end of Jajmani may not mean theend of casteism. To understand this, note the continuation of inequality anddiscrimination towards those seen as descendants of slaves in the USA whereslavery has been abolished for over 130 years.13

These models confirm the traditional positive association between castehierarchy and economic status. In contrast, in a somewhat bizarre exercise,Rao (1992) examines “compensating differentials” in moving to less




prestigious jobs. Following Dumont (1980), “prestige” is defined, in thecontext of the occupational structure of the caste system with castes orderedhierarchically, by considerations of ritual purity. The highest status isaccorded 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 traditionaloccupation of a caste higher ranked than their own (emphasis added).

What Rao (1992) completely fails to address is the more common caseof prestigious occupations simultaneously being the higher-paid of casteoccupations. His paper focuses on a narrow segment of occupations held byhigher-caste Indians. If his analysis were valid, then we should be able toconclude 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 ahigher-paying upper-caste job such as that of a trader to an even more high-caste, say, a Brahminical occupation, that may be lower-paying. The actualscenario may be the reverse – in the tussle between “prestige” and monetarygain, 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 UttarPradesh, find that among the upper and middle castes, the shift between 1978and 1990 has been towards “business” occupations (occupations traditionallyassociated with Vaisyas, very much part of the high castes).

Social mobility

Are, as Rao (1992) suggests, more members of the upper castes moving intolow-caste jobs? At the time of India’s independence in 1947 there was a belief that modern industrial development and urbanization would gradually loosenthe web of caste stratification and eventually lead to its demise.14 Have themost deprived been able to move into the uppermost echelons of the econ-omy? Nafziger (1975), in an investigation into caste origins of industrialists in

certain regions of South India, rejects the Horatio Alger model and finds a lowdegree of both caste and class mobility. He finds overlap in feudal dominanceand 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 – asmall-scale industry, supported and promoted by the government targetingdisadvantaged 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 attributedtheir lack of success not only to fate but also to their inability to get credit. “[I]nsome cases, reluctance to lend . . . based on prejudice . . . is certainly anelement in the lower levels of lending to Scheduled Castes” (Mayoux 1993:557).The significance of this finding cannot be overemphasized. Lanjouw and




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 sometimeslease out their land on cash rent, despite the unattractive terms of cash rentcontracts”.

Chandra (1997), examining the migration patterns of the Kanbis ( a lowcultivator caste) from Gujarat to Kenya between 1911 and 1939, argues thatcaste-acquired wealth abroad and the adoption of Brahminical practices upontheir return to India, meant that they could advance in the caste hierarchyto the middle range with the new name “Patidar”. This could be a caseillustrating the validity of the specific process of “Sanskritization” or a moregeneral one of wealth leading to a higher-caste status.15 It challenges thenotion 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 socialdistribution is less marked among the lowest castes”. They also raise the largerquestion of whether “Sanskritization should be seen as contributing to thebreakdown 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 maxi-mization would over-ride all other non-economic considerations, such as thecaste identity of the worker? Bhattacharjee (1985) tries to assess castediscrimination, over and above “institutional factors” such as unequal accessto education and industrial training, and finds evidence of discrimination inthe 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 beginsearlier – in unequal access to education. This is the so-called “pre-market”

discrimination, which even the most ardent supporters of the market willacknowledge. Dhesi and Singh (1988), in a sample study of Delhi, findevidence pointing to differential access to education among different religion/ caste categories, as well as evidence of wage discrimination. The highincidence of illiteracy among SCs explains a significant portion of their lowerearnings.16

Banerjee and Knight (1985) examine the crucial issue of whether labormarket discrimination takes the form of wage discrimination or job discrimi-nation.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 ameasure of wage discrimination. Their data also suggest that caste discrimi-nation may be a formal sector phenomenon because of the fact that formalsector jobs are prized jobs and hence resistance to hiring scheduled castesis greater. They find that “it is in the allocation of workers to jobs that




discrimination is most likely to be practiced. An employer would have noaversion to employing an untouchable provided that he worked in anuntouchable’s 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 atevidence of discrimination in a sample of 67,927 workers. What they fail topoint out is the fact that the SCs were only 5.3 percent of the sample – muchbelow their proportion in the population – which indicates discriminatoryexclusion. They find a statistically significant difference in earnings betweenthe SCs and the others. They also suggest that the level of earnings of the SCsmay be due to the reservation policy, implying that without the reservationpolicy 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 usecaste as a screening device for differences in productivity in the absence of perfect information” (Lakshmanasamy and Madheswaran 1995: 75). Here allthe questions that we raised about the Akerlof model become relevant. Whatneeds to be asked is why this imperfection of information becomes critical only vis-à-vis an SC employee. What if, owing to the same imperfect information,an upper-caste employee turns out to be less productive than expected? Whatinsurance 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 SCmigrants displayed a greater propensity than non-SC migrants for on-the-jobsearch in the formal sector but not in the formal sector. This seems surprisingin view of the fact that the government policy of reserving jobs for the SCsapplies in the public sector establishments of the formal sector. But theyinterpret this as evidence of discrimination, based on the results of an earningsfunction analysis (in another paper) of the same sample that found that in theformal sector, earnings were lower for the SCs. They point out that “thecontinuation of the search efforts shows that the SCs did not necessarily have

lower expectations and were not prepared meekly to accept their economiclot” (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 provideestimates for caste-based disparity in the distribution of consumptionexpenditures in rural India, based on NSS data, “perhaps constitut[ing] not somuch ‘findings’, properly speaking, as a confirmation of one’s worst suspicions– namely, that in the matter of caste discrimination in India, there is muchcause 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. Hisaccount is affirmed by case studies (for instance, Mishra 1979; Sharma 1986;Chaubisa 1988), casual empiricism and accounts of atrocities (Krishnan 1993;




Jain 1997) and rigorous statistical calculations. Nayak and Prasad (1984),looking at differences in consumption levels between the SCs and STs andothers for the state of Karnataka between two points five years apart, andSaggar 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 anddiscrimination 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 gapbetween the economic quantitative studies and the affirmative action

literature, most of which comes from sociologists and political scientists. Forinstance, Pai Panandiker (1997) and Chopra (1997) make comments on thenature 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-Indiaquantitative analysis? In fact, the Jayaraj and Subramanian (1994) study,mentioned above, suggests that Chitnis’ argument may not be borne out bythe facts.

The present chapter does not attempt to summarize all aspects of theaffirmative action literature, since that debate goes beyond the mereestablishment 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 evidenceregarding the persistent disparity of SCs and STs, based upon the availableevidence. Nesiah (1997) outlines the poor track record of SC–ST recruitmentin 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 toprovide for their inclusion, apart from what is mandated by governmentpolicy . . . [T]his lack of concern is manifest in the record of private sectoremployment [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 mostmarginalized groups into the mainstream or whether beneficiaries of affirm-ative action still face rejection in the set up to which they are admitted.

These debates are extremely contentious and complex; an in-depth critique




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

Conclusion

In a country with persistent and widespread poverty such as India, thepreoccupation with research on overall poverty and disparity is natural. But asa result of this, in the economic scholarship on Indian inequality, identificationof sources of inter-group disparity and understanding its causes, such asprejudice and discrimination, is still in its infancy. A critical review of theavailable literature suggests a prima facie case exists for considering caste asan 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’ responseshelped shape many of the ideas in this chapter) and for comments on an earlierdraft. I am also grateful to participants at the National Economic AssociationMeeting, New York, January 1999, and at the Mellon seminar at the CarolinaPopulation Center, University of North Carolina, Chapel Hill where a prelimi-

nary version of this chapter was presented, and to the CPC library courier servicefor 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 casteHindus” (Mencher 1974: 473) and thus form a large proportion of landless labor,not all landless labourers are untouchables (as Mencher discusses). There areissues about the growing proletarianization and the role of economic policy thatare fascinating, but are beyond the scope of this chapter.

2 This would be highly questionable, given the debate surrounding the validity of astrict 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 distinctfrom Hindu caste society. These are the Adivasis, who have origins which precedethe Aryans and even the Dravidians of the South. Many have lifestyles andlanguages 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 economicallythe weakest and historically subjected to discrimination and deprivation wereidentified in a government schedule as the target group of the reservation policy.These were called the Scheduled Castes (SCs) and Scheduled Tribes (STs). Theformer 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 definedsocial category. I use both the words in the chapter, and the context makes theirusage clear.

4 The literature on poverty and inequality in India is vast and I make no attempt toprovide a comprehensive list. To mention a few of the important works in this




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).

5 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 indiscussing the poverty of SCs and STs under the head “who is the poor” (1998: 5).

6 Both the Chicago school (Becker) and the economics of rural organization(Akerlof) have been criticized for an excessive focus on questions of efficiency atthe expense of distribution. See Hoff et al. (1993) for a more detailed discussion.

7 An objection to this from a sociological perspective could be that the contem-porary meaning of “belonging to a caste” is not clear – for instance, to what extentdoes caste affiliation determine the behavior of its members? Or, what exactly isthe 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.

8 Lal’s 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 laborintensive settled agriculture in the Indo-Gangetic plains, uncertainty concerningoutputs and so forth, the caste system was a “second best optimal response”. Ananalysis of this argument necessitates forays into ancient history that are wellbeyond the brief of this chapter.

9 The traditional caste divisions implied a hereditary work allocation, where thespecified arrangement of the flow of goods and services between the individuals inthe system was called the Jajmani System.

10 Lanjouw and Stern (1998) report on perceptions of change in Palanpur, wherepeople they talked to felt that caste-based distinctions had become less importantin recent decades (1998: 212). Such perceptions would find no place in theScoville model.

11 Platteau argues that patronage relationships display four main characteristics, which very briefly can be stated as follows:

a they are highly asymmetrical;b contain a strong element of affection;c are comparatively stable;d involve multiple facets of the actors concerned and imply a set of reciprocal

obligations which stretches over a wide and loosely defined domain, includingsome 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 explicitlater – basically he is assured of a pool of readily available trustworthy andcompliant labor for agricultural tasks and for ritual, social and political activitiesor duties.

12 Struggles for greater equality in land holdings were a part of the independencemovement and their strength varied across regions. Land reform after indepen-dence has been under the purview of state governments, thus depending entirely

on the political will of a given state government. These two factors togethercontributed to the lopsided nature of land reforms. This is discussed in somedetail in Deshpande (2001a).

13 For a comprehensive examination of the economic consequences of contem-porary racism in the USA, see Darity and Myers (1998).

14 Parallel claims have been made by Brazilian scholars about the impact of




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 apart of the process of social mobility as well as the idiom in which mobilityexpresses 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 wasable, in a generation or two, to rise to a higher position in the hierarchy by adopt-ing 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 theBrahmins, and the adoption of the Brahminic way of life by a low caste seems tohave 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 eco-nomic characteristics even within the same job” and job discrimination is definedas “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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International Struggles, New York University Press, New York, 328–48.Dhesi, A. S. (1996) “Unequal Opportunities in Education and Labour Market in

India,” International Policy Review, 6: 1, 61–9.Dhesi, A. S. and H. Singh (1988) “Education, Labour Market Distortions and

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Poverty-Alleviation Schemes,” in S. Subramanian (ed.), Themes in Development Economics, Oxford University Press, Delhi.

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Political Weekly, 19: 46, 1955–2053.Hoff, K., A. Braverman and J. E. Stiglitz (eds) (1993) The Economics of Rural

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Castes of Uttar Pradesh,” in K. Gupta and A. Pandey (eds), Population and

Development in Uttar Pradesh, B. R. Publishing Corporation, Delhi, 61–81.Jayaraj, D. and S. Subramanian (1994) “Caste Discrimination in the Distribution of

Consumption Expenditure in India: Theory and Evidence,” Centre forDevelopment Economics, Working Paper 18, August.

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Lanjouw, P. and N. Stern (1998) Economic Development in Palanpur Over Five

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Nayak, V. and S. Prasad (1984) “On Levels of Living of Scheduled Castes andScheduled Tribes,” Economic and Political Weekly, 19: 30, 1205–13.

Nesiah, D. (1997) Discrimination With Reason? The Policy of Reservations in the United

States, India and Malaysia, Oxford University Press, Delhi.Pai Panandiker, V. A. (ed.) (1997) The Politics of Backwardness: Reservation Policy in

India, Konark Publishers, Delhi.Platteau, J.-Ph. (1992) “Aristocratic Patronage as an Ingredient of the Caste System:

Formal Analysis and Dynamic Considerations,” STICERD Discussion Paper, No.36, London School of Economics.

Rao, V. (1992) “Does ‘Prestige’ matter? Compensating Differentials for SocialMobility in the Indian Caste System,” Economics Research Center, WorkingPaper, University of Chicago (PRC, 92–6).

Saggar, M. and I. Pan (1994) “SCs and STs in Eastern India: Inequality and Poverty

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Status Influences in Third World Labour Markets: Caste, Gender and Custom, deGruyter Studies in Organisation, No. 32,Walter de Gruyter, Berlin and NY, 49–59.

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Tendulkar, S. (1983) “Economic Inequality in an Indian Perspective,” in A. Beteille(ed.), Equality and Inequality: Theory and Practice, Oxford University Press, Delhi.

Tendulkar, S. (1992) “Economic Growth and Poverty,” in B. Hariss, S. Guhan andR. H. Cassen (eds), Poverty in India: Research and Policy, Oxford University Press,Bombay, 27–57.

Thorat, S. (1997) “Caste System and Economic Inequality: Some UnexplainedDisparities,” unpublished manuscript.

Vaidyanathan, A. (1992) “Poverty and Economy: The Regional Dimension,” in B.Hariss, S. Guhan and R. H. Cassen (eds), Poverty in India: Research and Policy,Oxford University Press, Bombay, 58–75.

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Development in Uttar Pradesh, B. R. Publishing Corporation, Delhi, 61–81.



8 The mobility of Japan’s Burakumin

Militant advocacy and government

response

Jacob Meerman

Not alien, just profoundly alienated.

(Loury 1997: 154)

Introduction

Japan’s Burakumin are a low-status minority of 2 or 3 million out of a totalpopulation of 130 million. They remain near the bottom of Japan’s classstructure, although they are identical genetically and culturally (samelanguage, religion, and customs) with other Japanese. Centuries ago, theyoriginated 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 theauthorities (Donoghue 1978: 27–8; Hirasawa 1989: 31). By and large onlythe memory of these groups remains, but the Burakumin still live in areasthat only yesterday were segregated and decrepit ghettos, and still work inlow-skill, blue-collar occupations. Long-standing discrimination by Japan’smajority explains their continuing existence as a low-status, low-incomegroup. Since the 1970s, partly because of the militant advocacy of the BurakuLiberation League (BLL), an organization of and for the Burakumin, Japan’s

governments invested the equivalent of tens of billion of dollars in ghettorehabilitation and education. This “big push” dramatically reduced the gap insocio-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” meansthose 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 liber-ation”; the extraordinary manner in which the government has responded; andthe question of the degree to which the Burkau minority is integrating into thelarger society. The condensed account that follows concentrates on thesethree themes.2



The mobility of Japan’s Burakumin 131

Buraku history

The institutionalization of the Buraku minority as polluted, endogamous,“ghettoized,” and exploited took place during the period of Tokugawadominion (1603–1867). To promote social stability, the Tokugawa formalized

Japan’s class structure into four quasi-castes: samurai, farmers, artisans, andfinally merchants. Birth determined to which group one belonged. TheShogunate also “undertook to regulate the morals of the people and toprescribe their behaviour in the minutest detail” (Samson 1950: 192). Thestatus and required behavior of the non-class, the outcast remainder, today’sBurakumin, was also defined.

The Tokugawa segregated and regulated Buraku families in their buraku(i.e. villages, although today many are in urban areas) frequently inundesirable areas, e.g. on steep hillsides, river flood plains and other wastelands. Many maps deliberately omitted these settlements, although theauthorities recorded the address of each buraku and the vital statistics of theirinhabitants on an individual basis (as they did for all other citizens). Marriage was permitted only within the group. Over time, Tokugawan sumptuaryregulation of Buraku dress and behavior became ever more humiliating. Insome periods they were required to wear distinctive clothing such as bluecollars; or were forced to keep their hair cut short. At times, their heads had toremain uncovered in all weather and women were not allowed to shave theireyebrows or blacken their teeth ( Japan, An Illustrated Encyclopedia 1993: 535).By the eighteenth century they were prohibited from entering public placesincluding 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) monopolyof butchery, tanning and leather-work was formalized. Other occupationsincluded roadwork, stonecutting, bamboo manufactures, subsistence farming,sweeping, fish-mongering, night-soil and garbage disposal, cremation andburial (Meerman 2002a). During the Tokugawa period, many desperate,nearly starving, rural people were dispossessed of their land (frequently forinability to pay taxes, or for revolting against their lords). These new Bura-kumin (or hinin) fled to towns in an attempt to earn a living, or in extremis, tobeg, although even begging might be limited by local authorities (Groemer2001: 263ff). During the nineteenth century Buraku children and adolescentscommonly worked in factories or as baby-sitters and house servants for thebetter off (Hirasawa 1989: 47). Some Buraku residents were forced to operateleper or prison hospitals deliberately located within the buraku.

The myths of the Burakumin as unclean, genetically inferior, and even asnon-Japanese developed around the historical role of Japan’s leather workers( kawata, or pejoratively and less precisely, eta). The introduction and spreadof Buddhism in Japan, prior to the first millennium, led to condemnationof 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 prohibitionagainst killing animals. Hence, butchery, tanning, and leather work werecondemned 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 andcondemned as morally, and intellectually tainted. Some of today’s Burakuminority trace their origins to villages of such leather workers.

During Tokugawa rule, the buraku also absorbed a wide range and largenumber of social deviants These “new” buraku residents, or hinin (non-people, therefore animal) were usually forced into Buraku occupations andbecame tarred with the same brush: in the minds of the majority, those forcedto live in burakus were blemished and contaminated. The authorities alsoencouraged many of the hinin to settle new ghettos and these also became

“buraku”of the polluted and impure (Kitaguchi 1999: 78 ff; Groemer 2001:274). Today the working definition of a member of the Burakumin is whetherone 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 traditionalleather workers, few Burakumin today have any significant genetic connection with the medieval leather workers.

The Tokugawa quarantine of the “unfit” also ensured that the Burakupopulation increased rapidly. The conversion of class to quasi-caste elimi-nated 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 difficultfor a Buraku resident to regain the status of a common citizen. Hence theinflux of “ hinin,” plus the natural increase in the established buraku, led to alarge increase in the number of Buraku people. Overall, the Buraku popu-lation may have increased threefold from 1720 to the mid-nineteenth century,a period when Japan’s total population stagnated (Neary 1997: 54).

The Tokugawa also assured the economic livelihood of the kawata Bura-kumin 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 theirdemise in the late nineteenth century!) Burakumin (both eta and hinin) alsoperformed many other roles in support of the regime. They were occasionallyused as militia to put down peasant revolts. Some became jailers, judicialtorturers, and executioners. They were generally charged with disposing of thebodies of those executed. Some acted as government “look-outs” on roadsor as gatekeepers who controlled entrance to towns (Acitelli-Donoghue1978: 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 Burakuimpurity and blemished faculties. Because these defects were believed to behereditary, it was necessary to isolate the Burakumin from society. They alsoused their creation in a police and military capacity (Neary 1989: Chapter 1).




The resulting association of the Burakumin with violent and vile dutiesincreased the commoner’s fear and contempt of them. Today, much of theantipathy of mainline Japanese to the Burakumin has its roots in Tokugawapolicy. Indeed, “Of all those special measurers which were created to help

maintain the power base of the Tokugawa Shogunate, anti-Buraku discrimi-nation 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 theBurakumin to “new common citizens.” Occasionally described as a paperemancipation, the political decree had little beneficial impact for the Burakupopulation. On the contrary, farmers (humiliated because the Burakumin nowhad equal legal status) undertook “a series of pogroms aimed at exterminatingthe new commoners in 1872–3 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 provedunable 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 disadvantagesof Buraku life and less to overcome the widespread discrimination againstthem. 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 theback or side of the classroom. Play groups, eating utensils and toilets wereusually kept separate (Neary 1989: 3). During the Meiji Period, Burakuleaders pursued a policy of reconciliation that stressed formal petitions forgovernmental relief, but little relief was forthcoming.

By the 1920s, militant, young Buraku organizers, much influenced byMarxism and by Christian doctrines, had founded Shuheisha (the Levelers’Society) to promote Buraku “liberation.” From its very beginning the neworganization 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 thediscriminatory act, e.g. removal of the guilty person(s) from authority.Protested actions covered a wide range, although many involved no more thandiscriminatory speech. “The chief character of these early denunciations wastheir spontaneity and anger” and many actions ended in injury or destructionof property, or in fights with rightist groups. By the 1930s, Suheisha had gained widespread respect within the Buraku community and was planningcampaigns with a view to maximum political impact (Upham 1987: 81–5). In

1937, however, Japan’s expansionist and militarist government simply closeddown Suheisha as destructive of national unity.

Following the Pacific War, Suiheisha re-emerged in 1947 as the NationalCommittee for Buraku Liberation with strong backing from Japan’s Com-munist and Socialist political parties. In 1955, the Committee became the



134 Jacob Meerman

Buraku Liberation League (BLL) and undertook a series of mass demonstra-tions and protests that increased public recognition of Buraku claims andsympathy 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 patternof employment, with its preponderance of low-paid day-laborers, cottageindustries, and high unemployment. In 1969, the national government hadestablished a nation-wide program of Buraku reconstruction and education bymeans of the “Special Measures Laws.” By then the BLL had over 2,000branches 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 providingbenefits under the Special Measures Laws. This dowa-district universe (alsotranslated from the Japanese as dowa areas) excludes about one-eighth of theapproximately 5,300 burakus identified by the government in the 1935 count(Su-Lan Reber 1999: n. 82). Second, currently less than half the population inthe dowa districts is classified as Burakumin in government surveys. Within

each district, the BLL and local authorities, and occasionally local politicalparties, have certified who is Burakumin and therefore eligible to receivetargeted government benefits. The error rate in assigning Burakumin identityis unknown (Upham 1987: 113).4 Third, the estimates necessarily exclude thebona 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 burakusincluded in the dowa districts at the time of the survey that were certified aseligible 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 theBurakumin who no longer live in buraku. (Important implications of thisshortcoming are taken up in the final section of the chapter.) Table 8.1 showsthe large lag in Burakumin tertiary education compared to the entire popu-lation 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

Buraku population All-Japan

% completed College 3.4 13.7% attending prestigious Universities 3 21

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




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

Burakub All-Japan

Receive welfare payments (“livelihood security support”)a 52 7Own their own homes 63 60Long-term absentees from Junior High School 5 2Cohort entry into Senior High School 92 96

Sources: Japan Government Somucho (1995), Surveys to Assess Conditions in the Dowa Districts, 1–31.The above data are cited by Neary (1997: 70–1).

Notesa 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)

Burakumin, National Census,1993 1990

Primary School certification 55 32

Secondary School certification 32 45Higher education certification 8 21(Of which University graduation) (3) (12)

Non-attendance and drops-outs at primary level 4 0.2

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

NoteData apply only to those who have completed their education.

Table 8.4 Highest education attained by Dowa-district Burakumin (1993) andall-Japan (1990), by age groups (percent)

Age Completed Completed Completed Completed Completed Completed(years) elementary elementary secondary secondary advanced advanced

only only only only Burakumin all-Japan Burakumin all-Japan Burakumin all-Japan

60–64 80.3 49.0 12.5 38.8 1.5 10.450–54 73.0 39.5 20.4 45.3 2.0 13.340–44 45.6 22.1 43.9 49.2 8.5 23.2

30–34 17.5 8.2 60.4 49.1 19.8 41.120–24 16.5 8.7 63.8 58.1 17.3 31.0Total 55 32 32 45 8 21

Source: Kyo no Buraku Sabetsu, Kaiho Shuppan (1996), as derived from McLauchlan (1999:14–15).



136 Jacob Meerman

poverty for many Burakumin. Table 8.3 indicates that the dowa-district Bura-kumin today continue to lag behind the general population in educationalattainment. It understates the gap in educational attainment because at alllevels, Buraku students attend schools of poorer quality than mainliners.

Table 8.3’s indication of the educational gap of the Buraku population is alsomisleading because educational attainment varies inversely with age, particu-larly with respect to the Burakumin. Table 8.4 eliminates this by providingdata by age cohorts.

Table 8.4 shows that for those in the age group 60–64, 14 percent completedsecondary school, while the all-Japan total was 49 percent, a gap of 35percentage points. For the most recent graduates, the age group 20–24, thedata 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 beendramatic. At the tertiary level the data are ambiguous. There has been anenormous expansion in the number of Buraku persons who have completedadvanced education. Yet measured in percentage points, the gap betweenmajority and Burakumin has increased from 9 percentage points for those inthe 60–64 age cohort to 14 points for those in the 20–24 age cohort. Moreover,compared to the majority, very few Burakumin have graduated from auniversity (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 inter-group disparity. At the national level, Buraku populations have lower laborforce participation rates than the majority, partly owing to higher rates of disability particularly among older workers, often the consequence of achildhood of poor nutrition and years of very hard labor. But even those in thelabor force have a lower rate of employment than the majority. Most Burakuemployees work in small and medium-size companies as blue-collar workers,

frequently as temporary workers or day-laborers (Tomonaga 1993: 12). Fewhave ever had employment as permanent staff of the large moderncorporations that pay the highest wages and offer life-time employment. A review of the occupational distribution of Buraku employees from an Osakaburaku (that has developed into a urban neighborhood) illustrates thesefindings. 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 inlabor-intensive, small-scale construction. (Su-Lan Reber 1999: 323).Consistent with this labor force account, estimates of comparative incomessince 1970 invariably conclude that mean Buraku incomes are 60 to 70 percent

of those of the majority.5




Discrimination against Burakumin

On-going and past discrimination explains the lag of the Buraku population inincome and status behind the Japanese majority. But statistical inference thatattempts to gauge the degree to which current discrimination (above all in

labor markets and education) causes the lag does not exist. This sectiontherefore describes the basic kinds of discrimination and indicates theirimpact. 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, resemblinganimals.”

● In 1922, in Beppu, Oita Prefecture, the local police had a buraku burneddown because of its proximity to the railroad line. Destruction wasdeemed necessary since part of the slum would have been visible from theCrown Prince’s Train as it passed through the town of Beppu. Prefecturalauthorities 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 hadcommitted a crime in marrying without disclosing his origins to his spouse(Su-Lan Reber 1999: 305).

● During the Pacific War, Buraku servicemen consistently received thelowest-status assignments.

● In the 1980s, the BLL documented many graffiti. They included “KillBurakumin, Buraku people are human garbage” on a bridge pillar inOsaka; a pamphlet that circulated at Osaka’s University of Fine Artsdeclaring inter alia, “to protect the natural superiority of all decentJapanese citizens . . . no possible concession must be made towards eta

filth”; in an Osaka primary school the graffiti was: “To the eta staff at thisSchool. We won’t eat anything you have made . . . go and cook the dregs of hell . . . maggots” (Kitaguchi 1999: 142–4).

● In the 1990s electronic media were used to circulate “discriminatorydocuments” to recipients of electronic mail or on web pages (Tomonaga1998: 25).

A key instrument in Buraku discrimination is the background investigationof genealogy and socio-economic status used to ferret out Buraku identity. Itsuse is most clearly documented with respect to marriage and employmentdecisions. Examination of family background to determine whether thecandidate is of sound lineage and adequate status is common in Japanesemarriage 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 employmentdecisions, Japan’s large modern corporations are particularly concerned that



138 Jacob Meerman

those invited to “join the company family” will fit in harmoniously with otheremployees (Upham 1980: 66–7). 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 Japan’s largest and most modern firms have purchased theselists and have used them to exclude job applicants of buraku origin, whether ornot they belonged to the Burakumin minority. The use and sale of such chimei

sokan (comprehensive guides to place names) is now illegal, although they stillhave a large sub rosa circulation. Investigators have also relied on the registra-tions of births and deaths by family ( koseki), with their addresses inmunicipality offices. These provide information on the place of birth,parentage, and current residence of all individuals born in Japan.7 Until 1976the koseki were open to the public. Today, would-be viewers or thoserequesting an abstract must explain the reason for the request, which themunicipal authority may refuse. Nevertheless these restrictions are frequentlyignored and discrimination based on koseki records remains common. During

Tokugawa rule, Buddhist temples (which also own and manage associatedcemeteries) were required to record vital statistics on their members, bothalive and deceased. Most continue the practice and may provide theinformation 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 burakuresidents. Buraku residence has been the only outward sign of the contami-nated bloodline of the individual Burakumin that supposedly arose in the

feudal past of the hereditary eta caste. This belief persists despite overwhelm-ing evidence that most individuals with a current or genealogical history of buraku residence have no connection with the leather workers of theTokugawa or earlier periods (Kitaguchi 1999: 81).8

Buraku discrimination persists notwithstanding Constitutional guarantees.Japan’s Constitution prohibits discrimination based on race, creed, sex, socialstatus or family origin (Article 14), guarantees the free choice of occupation(Article 22), of marriage (Article 24), right to work (Article 27), and accessto education correspondent to each person’s 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 orgroups in the labor market or school admissions a punishable offense9 (Upham1993: 327). During the late 1970s, as the BLL pressed for prohibition of the




lists used to identify individual Burakumin, the question of the need forspecific 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) isthat this would interfere with their right to select employees and would have aninjurious impact on firm operations.

The response of the Buraku Liberation League

Both governmental authorities and the BLL emphasize the need to changemainline beliefs and attitudes about the Buraku minority, rather than to

attempt to “legislate behavior.” The BLL has contended that prejudiceagainst the Buraku minority and the irrationality and superstition that giverise to it are so pervasive among all classes in Japan that enforceablelegislation against Buraku discrimination has not been feasible. Instead, theBLL has relied on “self-help.” Publications and conferences are part of therepertoire, but the League has also organized protests, street demonstrationsand picketing by members for many reasons, including targeting discrimi-nators, e.g. schools, teachers, firms, and publishing houses that printdistortions and ‘discriminatory phrases’ in books or magazines” ( Far East

Economic Review 1992: 28–9).However kyudan toso (denunciation struggle) has long been the League’s

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. Denunciationinvolves confrontation and judgment against the institutional or individualperpetrator of discrimination, generally followed by the discriminator’sapology and plan of remedial actions. In the event of presumptive discri-mination (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 denunciationprocedure that starts with a session designed to reach agreement between theBLL 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 thepresence of the teacher, his/her supervisors, but may also involve a repre-sentative from a higher level of government. In the denunciation campaign thetarget may not be so much the offender as the institutions seen as responsible

for the offender’s 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 exceedsthat of the “defendants.” The responsible parties rarely justify their actionsbut are apologetic and deferential to the BLL. League speakers energetically



140 Jacob Meerman

interrogate those considered responsible, directly or indirectly, for thediscriminatory action. Usually the latter agree to rectify their behavior, stresstheir determination not to repeat it, and indicate measures that will be takento 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 havingshown them the error of their ways (Otake 1997: 181ff).

The foregoing gives a stylized version of kyudan, at least as it was practicedbefore the 1990s. During the 1970s and 1980s, kyudan was usually menacingand extremely humiliating for the defendants. Rohlen’s description conveysthese 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 sodeeply that at last their eyes are opened to the reality of their “racist”thinking. Confrontations can last for hours and are often repeated overmany weeks. The person surrounded almost inevitably breaks down underthe pressure and yields to the insistent accusations and demands of thoseconfronting him. At times the initial shock treatment includes dancingand chanting around the person, a technique known as “Indian styleconfrontation”; however the intensity of the assault varies greatly with the

people involved and with the degree of resistance given. Some peoplefollowing the trauma of thus being confronted, say it was a deeply movingand worthwhile experience, similar to a religious conversion, but othersdespise the technique [since it ] assumes the individual’s guilt and leavesno room for self-defense. The Communist party calls it a “kangaroocourt” and a “violent assault on individual rights.” Clearly it can shatter aperson and suicides have occasionally resulted from such treatment,especially when the confrontations are extended to relatives of officials.On the other hand, the League’s 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 inthe entire history of kyudan toso, went well beyond this description. In 1974, atYoka High School in rural Hyogo Prefecture, 52 teachers were confined toschool premises by supporters of the League to persuade them to start aBuraku 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 3–6 weeks (Rohlen 1976: 982–9).

Denunciation sessions have been used as the principal tactic in elaboratecampaigns covering entire regions, including efforts to enhance access toeducational opportunities, improve infrastructure in Buraku settlements, anddenounce those responsible for the Buraku blacklists (an undertaking that




continued for 10 years). In 1975, the League launched a major denunciationcampaign 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. Japan’s massmedia “avoid the issue as much as possible” (Masayuki, 1991: 284). Discrimi-nation in word and deed has long gone underground.10 Consequently since theearly 1980s documentation of discrimination is rare.

Moreover, systematic measures of the scale and impact of denunciationactions are not documented. Although denunciation is often initially directedat individuals and associated institutions, such as schools or firms, it hasprobably been most effective when directed at government to force action onspecific problems. Perhaps it has been most successful in helping to induce the

government to undertake a vast program of rehabilitation of Buraku ghettosand of promotion of Buraku education with the introduction of the SpecialMeasures Laws discussed in the following section.

The failure of the national government to challenge kyudan toso suggeststhat Japan’s 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 forpersonal injuries filed on behalf of the Yoka high-school teachers) whensubjects of BLL denunciations have filed a criminal complaint, despite

obvious violations of the criminal code.11

During such suits the judiciary hasaccepted the BLL argument that denunciation is legal. In the Yata MiddleSchool Case (1975)12 the Osaka District Court concluded that “it’s justifiablefor society to accept the process called denunciation against discrimination aslong as the methods and tactics don’t exceed reasonable limits.” In ruling onthe appeal of this decision in 1981, the Osaka High Court affirmed theexistence of “an abstract right of denunciation” as claimed by the BLL duringits defense but also set limits in stating that denunciation is “cruel and soonbecomes a form of private punishment that can not receive the full approval of

the law” (Upham 1987: 96–8, 101; Neary 1997: 68). The BLL responded byasserting that “Charges that denunciation is intimidation are countered by theassertion that discrimination is intimidation, denunciation only its answer”and because the most fundamental human rights are invaded, denunciation isonly a form of self-defense (Upham 1987: 108).

The League’s denunciation tactics have become less aggressive since 1990,perhaps because of belief that old-fashioned kyudan toso has serious short-comings and reduced public support. In the 1990s the League worked withinternational human rights groups and stressed international human rights

declarations and treaties to which Japan has subscribed to structure theongoing “struggle.” Moving the discussion into the international human rightsarena may partly be due to the League’s conviction that legislation specificallyprohibiting and punishing the various forms of discrimination commonly usedagainst the Burakumin is highly unlikely (Buraku Liberation News, passim, ineditions appearing since 1990).



142 Jacob Meerman

Government programs to reduce discrimination

In 1961 the central government created a council to study the Buraku situationand to develop an anti-discrimination policy. The council’s report, completedin 1965, stressed that the Burakumin were identical to other Japanese, and

that their origins had in no way tainted or polluted them. The report sawBuraku condemnation and discrimination as deeply ingrained in majoritythinking, and as an expression of irrational and superstitious beliefs. Theaccompanying survey of burakus described “ghetto-like communities locatedon land liable to flooding . . . with poor housing . . . often lacking in such publicservices as sewers, tap water, streetlights and fire protection.” The shortfall ineducation was highlighted. It concluded that the deplorable state of theburakus had to be eliminated and that a large program of education needed tobe undertaken (Neary 1997: 63). Moreover it was “the state’s duty to resolvethe problem fundamentally and promptly,” and an enabling statute wasneeded to encourage governments to legislate special measures for theBuraku problem (Upham 1987: 85–6).

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 kindsof expenditure: capital outlays to improve buraku infrastructure; financialgrants 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 Burakudiscrimination was a “primary responsibility of the nation as a whole.” Rarelydid the state keep its part of the bargain. Nor has it intervened in projectimplementation, nor taken part in the bitter political fights (frequentlybetween the Communist Party and the BLL) that ensued over allocation of funds and distribution of benefits among the Buraku population (Upham1980: 48; Upham1987: 86; Neary 1997: 61–5).

Upham provides an excellent description of the programs, as they existed atabout 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 builtand turned over to the B.L.L. to manage; and perhaps most important tothe residents, a large amount of high-rise public housing is constructed.These programs are essentially urban renewal but with no attempt tochange the demographic character of the neighborhood. It remains aBurakumin neighborhood and relatively poor although some of the publicfacilities are new and there may be marginally more open space . . .

A second component of most programs consists of financial grants paiddirectly to Buraku families . . . The Osaka City program, although moregenerous than most, can serve as an example . . . When a Burakumin




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 anelaborate 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 moreheavily staffed with smaller classes and extra tutoring for Burakustudents. Second all schools both within and without the ghetto haveinstructional programs to explain the origin of Burakumin, the problem of discrimination, and the responsibility of the society under the newconstitution to eliminate it. Posters criticizing discrimination . . . areplaced in buses, subways and public offices. Speeches are given to unions,schools, neighborhood associations etc. by public employees specificallytrained to present the correct view of the Buraku problem. The emphasis

though is on the evil of discrimination and the democratic ideals of theconstitution. The content is heavily moralistic and didactic, in many waysreminiscent of moral campaigns in Taiwan or China.

(Upham 1980: 38–9)

Additional aspects of educational support are noteworthy. In the 1970s and1980s, many teachers made special efforts on behalf of the Burakumin. Theseincluded visits to the homes of Buraku pupils and development of measuresto provide financial assistance to cover the costs of school supplies and

uniforms.14

In some school systems, “welfare teachers” were employed on afull-time basis inter alia to encourage Buraku parents to send truant childrenback to school (Hirasawa 1989: 44, 65–9). Many of the welfare teachers“served the bridging function between Buraku communities and schools. Theyconducted seminars to improve teachers’ recognition of Buraku discrimi-nation problems. They suggested reforms in school curricula and activities to‘welcome’ absentee students to school” (1989: 69). During the 1970s, thenewly constructed Buraku community centers were often the scene of supple-mentary schooling and adult literacy classes.15 A few Buraku children up to the

third grade participate in supplementary academic classes provided at thecenters; in the past such classes were often run by volunteer teachers of Burakuorigins. They frequently emphasized the most difficult Japanese-languagearts, such as use of kanji (Chinese characters), a competence that is of crucialimportance 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 theform of loans. One Buraku innovation has become universal: free textbooks inthe public schools are now the nation-wide norm. In the early 1990s, accordingto BLL estimates, less than 1 percent of “finance [provided under the SML] is

used for educational purposes” (Buraku Kaiho Shimbun, July 1997, asreported in Kitaguchi 1999: 8). The rent subsidies have continued and thereare 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 subsidizethe Burakumin had decreased substantially, even before the beginning of theeconomic crisis of the 1990s.

How large have been the expenditures under the SML? In 1993, theNational Government carried out a series of surveys of the 4,442 burakus

designated as the dowa districts that benefited from SML programs. Thesurveys directly sampled about 60,000 Buraku households and 24,000 majorityhouseholds. It published the findings in 1995, as a report in four volumes. Thereport 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 5–10 percent of Japan’s annualGNP in the 1970s. Since 1979–80 (arbitrarily assumed to be the average-price year for the period during which SML expenditures took place), Japan’sconsumer price index has increased about a third (Japan Government 1999:

Table 15-9A). Expressing the total in today’s consumer prices gives ¥18,502billion. The World Bank estimates that the purchasing-power-parity (PPP)rate of exchange between the yen and the US dollar in 2000 was ¥138 perdollar (World Bank 2002: 232ff), so the PPP total in US dollars comes toUS$134 billion.16

The total number of Burakumin certified as eligible for such benefits wasnearly a million. Were it a million, the total would imply outlays per Burakuperson in PPP US dollars for 2000 of $134,000, extremely high support perBuraku person. In addition to these benefits, in 1993, 53 percent of Buraku

households in the dowa districts received ‘livelihood security support,’ wellabove 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 thantwo-thirds of their rent payments as subsidies (Japan Government, Somucho1995: 4, 21–2, as cited by Neary 1997: 70).

The course of the SML brings to mind the concept of “reparations” in themeaning that the word has assumed for many in the USA: compensation forhistorical injury and injustice, that would not necessarily resolve the problem

of poverty within the US African American community. Thus Uphamconcluded that:

The ringing language of the S.M.L. and the conspicuous urban renewalprojects serve as highly visible symbols of the government’s commitment




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 intrying 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 obviousthat most of the financial resources of the SML were used not for welfare pur-poses but to eliminate the intolerable physical state of the buraku ghettos (andone 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 Burakuminblacklists by numerous private investigators. Both Upham and Su-Lan Reberpropose a solution built around a law against discrimination, above all inemployment, but also in school admissions. Su-Lan Reber suggests that“discrimination be made a civil instead of a criminal offense” since a “lowerstandard of proof would be required” and a “civil offense would most likelyresult in settlements out-of-court, which would be more suitable to Japan’s judicial system and culture.” Moreover, “Perhaps a body like the EqualEmployment Opportunity Commission in the USA would be a valuable and

appropriate entity to examine views of discrimination in the first instance.” Inaddition: “A law should be created to outlaw the use of buraku lists fordiscriminatory purposes; further a government body should be assigned therole of overseeing businesses and other organizations that are susceptible tousing these lists for damaging purposes” (Su-Lan Reber 1999: 348–57).

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 insocio-economic disparity between the Buraku minority and the majority. Thisis clearly signaled by the reduction in the education gap at secondary level.Before passage of the SML, few Buraku children received more than thecompulsory 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 thatit 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 themobility 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 aconsequence, the difficulties in developing what might be called a “mobilitymetric” that fits the Buraku case.



146 Jacob Meerman

Serious difficulties come to the fore with every attempt to estimate who isBurakumin. The government’s current definition, used to determine whobenefits from the SML, has a two-step test: first the Burakumin lives in theformer ghettos or special buraku, today’s 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 theBuraku population and there has been no Buraku emigration from theburaku. Neither assumption is true. There always has been substantialmovement of Burakumin out of the buraku. At the moment of emancipation(1871) many of the hinin were quickly able to leave their buraku for mainlinecommunities. But there was also a large influx of people into new burakusbetween 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 bonafide Burakumin.) Neary reviewed several reports and noted that:

A survey of conditions in Kyoto in 1938 found that only 57% of thoseliving within the Buraku areas had been born there and over 60% who hadmoved into the Buraku had migrated since 1932. Further, we are told, thatthe 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 fideBurakumin are descendants of people who moved into the buraku after 1871.

It is likely that the pace of Burakumin out-migration greatly acceleratedafter the passage of the SML. The laws promoted a very large increase ineducational attainment among the Buraku minority while the boomingJapanese economy dramatically increased middle-class and other job oppor-tunities for the newly educated Buraku minority. More education alsopromoted positive changes in basic attitudes of the more successful Burakustudents (reduction of oppositional identity) and self-perception (increased

self-esteem and confidence) but also reduction of distinctive Buraku speechpatterns and behaviors. All of this probably facilitated the out-migration andintegration of a large number of Burakumin into mainline Japanese society.Presumably this emigration is the reason why the average age of the Burakupopulation within the dowa districts is now above the Japanese mean, whilethe Burakumin share of total dowa district population decreased from 72percent 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 theburaku also indicates an increasing degree of integration. Somucho survey

data from 1993 found that only one-quarter of Buraku married couples livingin a dowa district and under the age of thirty were endogamous, that isconsisted of two spouses who were bona fide Burakumin, while 79 percent of marriages with husband aged 75 or older were endogamous (Japan, Govern-ment, Somucho 1995: Life Style Research Survey, Table 2–9).

The BLL also insists that many Burakumin have left the burakus and




attempted to pass as majority Japanese and estimates that there are 3 millionBurakumin alive today. Since the total of those Burakumin still resident in the6,000 special buraku is estimated at 1.2 million,17 the League estimate impliesthat 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 percentof the total population. In contrast, the five government estimates madebetween 1871 and 1993 estimated a proportion that varied from 1.1 to 1.5percent, albeit while defining the Burakumin solely in terms of burakuresidency (Meerman 2002b). A crucial unresolved issue in this estimationexercise is the treatment of inter-marriage by Burakumin who have “passed.” At what point, in succeeding generations, do offspring with a singleBurakumin 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 measuredby income or other marker of socio-economic status) because membership inthat minority is undefined. Parity could also be measured by the increasingdegree of exogamy over time, since exogamy is the acid test of a minority’sacceptance by and integration into the larger society.18 But this also has notbeen studied.

Nevertheless, given the high degree of mobility into and out of the buraku itis probable that a large part of the Buraku minority has been integrated intothe larger society. Perhaps, on average, the integrated Burakumin enjoy

higher income and status than those who have remained in the dowa districtsowing to reduced discrimination, access to better education, greater preva-lence of a mobility-promoting family culture, better peer culture, etc. If this istrue, redesigning the statistical and other data on the Burakumin to includeinformation on those Burakumin who have “passed” would reduce the statusand income disparity of Burakumin with mainline Japanese. Some scholarsconclude that widespread “passing” by the (presumably) more upward mobileBurakumin 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 Burakuminmight be considered as a segment of a Japanese under-class, rather than thesuccessors to an historical out-caste. Or consistent with mainline views of theburaku 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 asthose of eta/hinin origins now makes the Burakumin a decreasing minorityeven within the buraku. Nevertheless, many buraku have retained theircharacter 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 popu-lation per se, rather than continuing concentration on an ever-more elusivetarget, the descendants of the historical eta/hinin. In this way those Burakuminmost in need, still “stuck” in the buraku, would not be neglected, while Japan’s

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 thetime of the Emancipation Proclamation, is in some sense caught in a povertytrap.20 Analysis that seeks to understand why they remain in the buraku, whilethe other “historical” Burakumin have integrated into the larger society, couldbe helpful in advancing work addressing the general problem of theconcentration of poverty in low-status minorities whose history of exploitationand of low mobility somewhat parallels that of the Burakumin; e.g. African

Americans in the Western Hemisphere or the Dalits of India or native peopleslong over-run by European colonizers as in Australasia. Further Burakuanalysis could build on the work of George De Vos and others who made astart with this endeavor in their analysis of Buraku sub-culture (itself aconsequence of earlier exploitation) as contributing to the persistence of thelow status and income of the dowa-district Burakumin vis-à-vis the largerJapanese population (De Vos 1992).

Some political scientists believe that a deprived minority will rarely be ableto 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 necessaryelement in accelerating the pace of Buraku integration into the largerJapanese community. Specifically, without the BLL history of kyudan toso,and various other techniques of intimidation, mass protest, and energeticpicketing, 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 thetraditional names of the two derivative groups of the Burakumin, the eta (filthy)and the hinin (less than human), two extremely derogative nouns. The usagemakes sense since the eta/hinin were confined to ghetto villages that becameknown as special buraku. Recently the word Burakumin has also become lesscorrect 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 leadsto confusion since sometimes buraku means solely the village or villages of theBurakumin. It is also misleading since the majority of those living in the historicalburaku 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.




2 The implicit model that underpins this chapter is part of a research program thatcompares the mobility experience of four low-status minorities in normativeperspective (Meerman forthcoming). A brief summary of this research is includedin 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 reduceBuraku 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 poorconditions economically, socially, and culturally and whose socio-economicpositions are considered to be unjustly hampered by discrimination based on thesocial 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 1872–3 thatlisted the names and addresses of “all new commoners,” i.e. Burakumin. Fromthis it was possible to derive the addresses of all burakus. The address list wasupdated with the publication of the “General List of Buraku Districts,” compiledby the government in 1935. A more recent list, of more than 200 pages, purports toprovide an up-to-date list of all burakus including the number of households perburaku, and the occupations of their residents (Su-Lan Reber 1999: 311–12).

7 The right to school attendance and other social benefits requires registration of the new-borne in a koseki.

8 Tomohiko Harada’s definition is precise: “those people who were born, broughtup 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 buthave blood relationship with burakumin – all these are considered the burakuminminority 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 citedby Su-Lan Reber 1999: 300.

9 The 1947 Labor Standards Act prohibits wage and other forms of labor discrimi-nation but is not enforceable.

10 It is possible that independent research on the Burakumin reported in English isfurther 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 discrimi-natory. In the course of the denunciation procedure the teachers were held againsttheir will until 3 in the morning, were intimidated in many ways and described byLeague officers as rats, and prejudiced bigots, inter alia . However food was provided,rest periods taken, and the rest room was available (Upham, 1987: 87–9, 99).

13 In 1973, for example, the Prefecture of Osaka budgeted $245 million forBurakumin improvements (Rohlen 1976: 689).

14 Zendokyo, a national advocacy organization of teachers, officials, and parents hasbeen particularly active in working with Japan’s 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 adultsin 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 forone reason or another did not opt to participate in the SML programs as dowadistricts. See Buraku Liberation News, No. 96, May 1997: 8.

18 “Intermarriage may well be considered the last step in assimilation. Sociologistshave 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 inbringing 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 dowadistricts (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 smallnumber of middle-range performers in relation to the national average” (Okanoand Motonori 1999: 125).

References Acitelli-Donoghue, A. (1978) “The Origin and Development of the Japanese Pariah,”

Chapter 2 in J. D. Donaghue, Pariah Persistance in Changing Japan: A Case Study,University Press of America, Washington, DC.

Buraku Liberation (and Human Rights) Research Institute (ed.) (1981) Long

Suffering Brothers and Sisters Unite, Liberation Publishing House, Osaka.Buraku Liberation (and Human Rights) Research Institute (1983) The Road to a

Discrimination Free Future, Liberation Publishing House, Osaka.Buraku Liberation (and Human Rights) Research Institute (1991) The Reality of

Buraku Discrimination in Japan, Liberation Publishing House, Osaka.Buraku Liberation (and Human Rights) Research Institute (various) Buraku

Liberation News (Buraku Kaiho Shinbun).Clear, L. (1991) Education for Social Change: The Case of Japan’s Buraku Liberation

Movement, unpublished PhD dissertation, University of California at Los Angeles.De Vos, G. A. (1992) Social Cohesion and Alienation: Minorities in the United States

and Japan, Westview Press, Boulder, CO.Donoghue, J. D. (1978) Pariah Persistence in Changing Japan: A Case Study,

University Press of America, Washington, DC.Glazer, N. (1997) We Are All Multiculturalists Now, Harvard University Press,

Cambridge, MA.Groemer, G. (2001) “The Creation of the Edo Outcaste Order,” Journal of Japanese

Studies, 27: 2, 263–93. Japan, An Illustrated Encyclopedia (1993), Kodansha Ltd, Tokyo.Japan, Government (1999) Statistical Yearbook, Bureau of Statistics, Management

and Coordination Agency, Tokyo.Japan, Government, Somucho (1995) Heisei Gonendo Dowachiku Jittai Haakuto

Chosakekka no Gaiyo (Surveys to Assess Conditions in the Dowa Areas), 1–31.Somuchokan Kanbo Chiiki Kaizen Taisakushitsu (Report by the Management andCoordination Agency of the Prime Minister’s Office), 4 volumes, Tokyo.

Kirasawa, Y. (1989) A Policy Study of the Evolution of Dowa Education in Japan,unpublished PhD dissertation, Harvard University.

Loury, G. C. (1997) “ The Conservative Line on Race, Review Article of America inBlack and White,” The Atlantic Monthly, November.




Masayuki, T. (1991) “A Living Legacy of Discrimination,” Japan Quarterly, July–September, 283–90.

McLauchlin, A. (1999) “Introduction,” in S. Kilaguchi, An Introduction to the Buraku

Issue, Questions and Answers, Japan Library, Curzon Press, Richmond, Surrey, UK.McLauchlin, A. (2001) An Ethnographic Report on Fieldwork in a Japanese Buraku

Community, Christ Church Polytechnic Institute of Technology, New Zealand,unpublished.

Meerman, J. (2001) “Poverty and Mobility in Low-Status Minorities: The Cuban Casein International Perspective,” World Development, 29: 9, 1457–82.

Meerman, J. (2002a) Description of Buraku Occupations and Corresponding

References, mimeo.Meerman, J. (2002b) Detailed Estimates of the Total Buraku Population, mimeo.Meerman, J. (forthcoming) Slow Roads to Equality, Poverty and Mobility in Four Low-

Status Minorities, manuscript .

Neary, I. (1989) Political Protest and Social Control in Pre-War Japan, The Origins of

Buraku Liberation, Humanities Press International, Atlantic Highlands, NJ.Neary, I. (1997) “Burakumin in Contemporary Japan,” in M. Weiner (ed.), Japan’s

Minorities, The illusion of Homogeneity, Routledge, New York.Okano, K. and T. Motonori (1999) Education in Contemporary Japan: Inequality and

Diversity, Cambridge University Press, Cambridge.Otake, E. (1997) Ayabe Life: Its Dimension of Buraku and Buraku-Min, unpublished

PhD dissertation, University of Indiana.Rohlen, T. P. (1976) “Violence at Yoka High School: The Implications for Japanese

Coalition Politics of the Confrontation between the Communist Party and the

Buraku Liberation League,” Asian Survey, 16: 7, 682–99.Samson, G. B. (1950) The Western World and Japan: A Study in the Interaction of

European and Asian Cultures, Knopf, New York, quoted by J. Keegan, A History of

Warfare, Vintage Books, New York.Su-Lan Reber, E. (1999) “Buraku Mondai in Japan: Historical and Modern Perspec-

tives and Directions for the Future,” Harvard Human Rights Journal, 12: 297–359.Taira, K. (1970) “Review Article: Japan’s Invisible Race Made Visible?,” Economic

Development and Cultural Change, 19: 1, 663–8.Tomonaga, K. (1993) “From Partial Solution to Radical Solution of the Buraku Issue:

A Critique Based on the Reality of Discrimination Against Buraku People,” in

Human Rights in Japan from the Perspective of the International Covenant on Civil and Political Rights: Counter-Report to the Third Japanese Government Report,Buraku Liberation Research Institute, Osaka.

Tomonaga, K. (1998) “A Critique Based on the Present State of Discrimination Against Buraku People,” Buraku Liberation News, No. 104.

Upham F. K. (1980) “Ten Years of Affirmative Action for Japanese Burakumin: A Preliminary Report on the Law on Special Measures for Dowa Projects,” Law in

Japan Annual, 13, 39–73.Upham F. K. (1987) Law and Social Change in Postwar Japan, Harvard University

Press, Cambridge MA.

Upham F. K. (1993) “Unplaced Persons and Movements for Place,” in A. Gordon(ed.), Postwar Japan as History, University of California Press, Berkeley.

World Bank (2002) World Development Report 2002, Oxford University Press for theWorld Bank, New York.



9 Malaysia’s 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 socio-economic conditions and racial divisions in income disparity. It examines howsubsequent policy makers adapted to market dynamics by formulating policiesthat were essentially based on the principles espoused in the formation of theNEP, and how successful this was in ensuring that the end objectives of thepolicy were achieved. Malaysia is very dependent on human capital to achievestrong 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 haveundertaken specific government-mandated measures to increase economicgrowth while maintaining political stability.

The NEP was launched in 1971 to protect the economic interests of theindigenous Bumiputera community, which comprises twenty races and ethnicgroups, most notably the Malays. It was aimed at reducing poverty and inter-racial 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 backgroundof Malaysia

More than anything else, the racial composition of Malaysia is the key tounderstanding the whole picture. It dictates the pattern of the economy,has helped to shape the constitution, and has influenced the democraticprocess and the party system.

(Milne 1967)

Malaysia’s blessing of natural resources can be deemed indirectly responsiblefor its racial composition. The heavy dependence of the country’s economy oncommodities during the era of British colonization led to a dire need for workers in the various sectors of the economy, particularly paddy cultivation,



Malaysia’s New Economic Policy 153

tin mining, and rubber tapping. The period of British colonization also saw anincrease in the numbers of Malays working as civil servants, particularly inmore urban areas. This resulted in a shortage of workers to assist in theextraction of the two other important commodities – tin and rubber, which

led to the importation of foreign workers from China and India. Today’sdemographic patterns still exemplify the colonial model of industrialsegregation, with the Chinese mainly concentrated in mining and the Indiansin rubber tapping.

Malaysia is today a multi-racial country made up of people who come fromdifferent backgrounds of race and religion and who speak different languages.The ethnic composition of the country was further influenced by the 1957Constitution 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 gavethem special rights and privileges in the form of subsidies, scholarships,quotas, licensing, and trade concessions. Some Chinese leaders claimed thattheir acceptance of Malay ‘special rights’ was conditional on the understand-ing that they would be removed once the Malay/Bumiputera community wason par economically with the Chinese community. The Malay elite, on theother hand, claim that acceptance of “special rights” was forever (Chin 2000).

Despite an impressive growth of 6.1 percent and a total increase in percapita income of over 30 percent over the decade ending in 1970, the

demographics of Malaysia were still characterized by strong economicimbalances between urban and rural areas, between agriculture and non-agriculture, as well as between paddy farmers, fishermen, rubber small-holders, and the modern rubber estates. Unemployment rose at an averagerate of 3.7 percent while the labor force increase grew at 2.9 percent (Malaysia1971). 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 amongstthe 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 tendedto encourage the Malays to maintain their long-standing location in thetraditional agricultural sector of the economy, including the least productiveareas of fishing and rice cultivation. However, the Chinese were engaged inthe more lucrative, highly efficient and productive commercial and industrial

sectors. Growing industrial demand for tin, coupled with the discovery of largeand rich deposits in Larut and Kinta in the state of Perak in the earlynineteenth century had given rise to Chinese investment, British interventionand domination and finally, injection of foreign, mainly British capital andtechnology into the Peninsular. By 1883, Malaysia had become the largest tin



154 Faridah Jamaludin

producer in the world, supplying about 55 percent of the world’s tin. Althoughthe 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 86percent in rural areas. The incidence of poverty was especially prevalentamongst 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 imbal-ances, not only in income but in employment patterns grew, as governmentpledges for greater Malay participation remained unfulfilled. Exacerbatingthis discomfort was the failure of the government to secure an overall two-

thirds majority in the 1969 general elections, which produced fear of a political weakening of the National Front, a three-party coalition comprising TheUnited Malays National Organisation (UMNO), The Malaysian Chinese Association (MCA) and The Malaysian Indian Congress (MIC). The Fronthad defended the existing Malay “special rights” guaranteed in Article 153 of the Malaysian Constitution. With the loss of the secure foothold in govern-ment, communal unease grew and racial tensions finally ignited into a riot onMay 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 disparityand different levels of growth among the various races were cited as the mainsources of the inter-ethnic strife. After a series of short- and medium-termplans 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 thatindividual decisions will optimize economic performance in terms of society’spreferences and economic goals. This clearly applies to Malaysia – prevailingdissatisfaction with the economic imbalance reached a climax in the 1969racial riots in Kuala Lumpur. It was recognized that the period of British

Table 9.1 Race, poverty, and family income

Race Poverty rate (%) Average monthly family income (RM)

Malay 64.8 172.00

Chinese 26.0 394.00Indian 39.2 304.00Others 44.8 813.00




colonization had left a fragmented economic organization in the country which needed repair. The government launched the NEP in 1971, during theSecond Malaysia Plan spanning the years 1971–5. Rather than constituting asingle economic reform per se, it functioned more as a set of objectives and

resulting policies. The NEP represents a dynamic set of policies that werecontinually amended to take account of changing external conditions as wellas the program’s own successes and failures (Stafford 1997).

The NEP, which was necessary to break the link between racial identifi-cation and occupational niches, also was an attempt by the government toachieve a more equitable distribution of income among the various ethnicgroups. Its launch marked a period of heavy government intervention andplanning in the economy. The two-pronged policy sought “to eradicatepoverty among all Malaysians and to restructure Malaysian society so that the

identification of race with economic function and geographical location isreduced and eventually eliminated, both objectives being realized throughrapid expansion of the economy over time” (Malaysia 1971).

The policy was designed to span a period of 20 years. The target was to havethe the Bumiputera own 30 percent of the country’s wealth by 1990, anincrease from about 2 percent in 1970. The Outline Perspective Plan (OPP),1970–90, provided a series of long-term targets designed to help restructurethe racial composition of employment and the ownership of wealth. It speci-fied goals for corporate ownership and employment by racial group in 1990,

with an emphasis on corporate assets, presumably to expand Malay participa-tion in the modern non-agricultural sectors in which Malay ownership wasmarkedly under-represented. The government emphasized that the restruc-turing of the economy was to be undertaken by rapid expansion, and thereforethere should be “no grounds for fear or anxiety on the part of other Malaysiansthat government intervention in the private sector on behalf of the Malaycommunity will lead to a deprivation of the rights or prospects of non-Malays”(Malaysia 1973).

Only by the launch of the Third Malaysia Plan (1976–80) (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 inquantitative terms:

1 The incidence of poverty was to be reduced from 49.3 percent in 1970 to16.7 percent in 1990;

2 The ownership pattern of share capital in limited companies was tochange 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 Harrod–Domar growth out-look, concentrating on investment with the expectation that industrialization would pull the rest of the economy along. Under the leadership of Tun AbdulRazak, the government pursued the following four main strategies:




1 Increasing productivity and living standards of the poor through rural areaurbanization (Rural Development Policies) and developing backwardstates and areas through new territory development programs.

2 Reducing imbalance steadily and progressively, through overall economic

development and direct income transfers.3 Increasing Bumiputera asset ownership by stock allocations and publicownership through intervention in commodity markets.

4 Shaping a Bumiputera culture inclined towards commerce and industry byestablishing agencies entrusted with promoting greater commercialityamong 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 mobil-izing 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 implemen-tation of these policies. In 1970 the Agricultural Bank of Malaysia wasestablished to provide agricultural loans and credit. During 1971–80, 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 agencydisseminating market information. The Rubber Industry Smallholders’

Development Authority (RISDA) was established in 1972 to administer areplanting 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 tradingand the PNB was a holding company which held assets worth RM10 billion in1990, investing in areas such as industry and commerce, mining, propertiesand plantations, most of which will eventually be transferred to Bumiputeraindividuals through a unit trust scheme, Amanah Saham Nasional.

The NEP concentrated on development by “trusteeship.” The trustees werea small group of political decision makers whose visions determined theformulation of the policies, and there was a large body of officials and publicservice staff responsible for the execution of these policies and programs.Mehmet (1986) believes that under trusteeship, politicization has been givenofficial sanction and has been institutionalized within the entire spectrum of the fight against rural poverty. Under the policy, the Bumiputera receivedfavorable 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 equityrestructuring.

In mid-1980s, under the Mahathir government, the “Look East” policy waslaunched; foreign investors were encouraged to conduct joint ventures withthe Bumiputera. Big government projects were developed, such as the




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

“Active participation, not disruptive redistribution”:the economic consequences of the NEP

This section examines the effects and changes in several areas of the economyduring and after the NEP policy period. It attempts to evaluate the success of the policy in alleviating poverty and ameliorating income inequality duringthis 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 statisticsthere had been a 41 percent reduction in poverty levels among the Malays, a 19percent reduction among the Chinese and a 30 percent reduction among theIndians. As a result, the gap between inter-racial poverty levels narrowed, atrend that assisted in achieving the second target of the NEP, reducing incomeinequality. A breakdown of poverty levels within the economy show that

between the years 1970 and 1984 the overall poverty level in the rural stratadeclined 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 povertygroups, except that of small coconut growers, fell steadily throughout theperiod. However, it should be noted that this does not necessarily imply thatall members of the rural strata experienced an improvement in their standardsof living. There had been a reduction in absolute numbers of the rural workingpopulation over the years as the workforce composition had shifted in favor

Table 9.2 Incidence of poverty, 1957–87 (percent)

Pre-NEP (actual) NEP targets NEP results (actual)

1957–8 1970 1980 1990 1980 1984 1987

Rural 59.6 58.7 43.1 23.0 37.7 24.7 22.4Urban 29.7 21.3 15.8 9.1 12.6 8.2 8.1

Total 51.2 49.3 33.8 16.7 29.2 18.4 17.3Malay 70.5 64.8 Decline 39.3 25.8 23.8Chinese 27.4 26.0 Decline 16.5 7.8 7.1Indian 35.7 39.2 Decline 20.5 10.1 9.7

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




of urban employment sectors such as manufacturing, an area in whichBumiputera involvement rose from 29 to 33 percent.

Amelioration of income inequality

The NEP period also saw a successful reduction in income disparities amongthe various ethnic groups. The Gini coefficient figures for the period 1970–87

show an overall decline from 0.50 to 0.46, indicating a positive trend in thereduction of income inequality. Table 9.4 provides a detailed breakdownof the Gini coefficient figures. However, it is interesting to note that thecoefficient figures of the rural Malays showed little improvement, rising from0.42 in 1970 to 0.43 to 1987. Despite a higher concentration of wealth amongstthe more influential Malay businessmen who benefitted from the NEPpolicies, a trickle-down effect to the rest of the community was not achieved.The phenomenon of intra-ethnic inequality led to intense debate over thebenefits 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 corporateownership. The Bumiputera in particular were encouraged to obtain shares in

Table 9.3 Peninsular Malaysia: poverty levels according to urban–rural areas,1970, 1976, 1984

1970 1976 1984Strata Poverty rate (%) Poverty rate (%) Poverty rate (%)

Rural 58.70 47.80 24.70Small rubber tappers 64.70 58.20 43.40Rice farmers 88.10 80.30 57.70Estate workers 40.00 – 19.70Fishermen 73.20 62.70 27.70Small coconut growers 52.80 64.00 46.90Other farmers 89.00 52.10 34.20Other industries 35.20 27.30 10.00

Urban 21.30 17.90 8.20

Agriculture – 40.20 23.80Mining 33.30 10.10 3.40Manufacturing 23.50 17.10 8.50Construction 30.20 17.70 6.10Transportation and public

amenities 30.90 17.10 3.60Trading and services 18.10 13.90 4.60Unspecified sectors – 22.40 17.10

Total 49.30 39.60 18.40

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

(1977); Household Income Investigation (1984).




corporate assets to increase their participation in modern non-agriculturalsectors. The distribution of corporate assets among the various races between1970 and 1990 is captured in Table 9.5. Despite a 17 percent increase inBumiputera share ownership, it can be seen that the wealth restructuringtargets 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 onlygroup to have lost out from this policy were foreign residents, whoexperienced an actual reduction in their share in the wealth pie.

Nevertheless, owing to its focus on one ethnic group, the NEP was acontroversial policy that was resented by the non-Bumiputera in Malaysia.Chinese complaints included allegations that the second prong, the restructur-ing of the economy to help the Bumiputera, was given too much priority overthe first prong, eradication of income regardless of race. Table 9.6 illustratesthe 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 theBumiputera income was 1.6 percent more than that of the Chinese and 3.6percent more than that of the Indians. In real terms, their average incomeincreased by about 30 percent, whereas incomes of the Chinese and Indiansincreased by 20 percent and 9 percent, respectively.

With the positive average growth rates of Chinese and Indian income, itcannot 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 Bumi-putera were. Nevertheless, the emphasis on the economic status of theBumiputera led to a reduction in disparity between the ethnic groups. Theaverage Bumiputera household income increased from 52 percent of Chineseincome to almost 57 percent, and from 65 percent to 78 percent of the Indian

Table 9.4 Peninsular Malaysia: Gini coefficients, 1970–87

Ethnicity Strata 1970 1976 1984 1987

Malay Rural 0.42 0.47 0.45 0.43

Urban 0.45 0.48 0.46 0.44 Total 0.47 0.49 0.47 0.45Chinese Rural 0.40 0.49 0.41 0.40 Urban 0.47 0.51 0.46 0.44 Total 0.46 0.51 0.45 0.43Indian Rural 0.36 0.39 0.35 0.35 Urban 0.50 0.50 0.44 0.44 Total 0.46 0.46 0.42 0.40

All 0.50 0.53 0.48 0.46

Source: Osman-Rani (1990).




income. It can thus be concluded that although on a social front the secondprong was not widely accepted, it nonetheless succeeded in achieving its mainaim 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 povertylevels and income inequality trends, the full objectives of the NEP had notbeen achieved: the Bumiputera were in control of only 19 percent of the totalcorporate equity, 11 percent short of the intended target. Income disparitieshad also failed to decline to target levels. Structural and sectoral constraintsstill existed where the industrial base was restricted and limited the prospects

of growth. There were shortfalls in the availability of infrastructure, industrialland, water and energy, exacerbated by a recession in the economy in the late1980s 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 inthe socio-economic conditions were meagre in comparison to what had been

Table 9.5 Ownership of share capital in limited companies, 1970–90 (percent)

Pre-NEP Estimated Estimated (Actual NEP results)(actual) targets targets1970 1980 1990 1980 1985 1988

Bumiputera 2.4 16.0 30.0 12.5 17.8 19.4Individuals 1.6 3.4 7.4 5.8 10.1 13.0Trust agencies 0.8 12.6 22.6 6.7 7.7 6.4Other Malaysians 34.3 40.4 40.0 44.6 56.7 56.0Foreign residents 63.3 43.6 30.0 42.9 25.5 24.6

Source: Osman-Rani (1990).

Table 9.6 Peninsular Malaysia: average monthly household income according toethnic groupings, 1979 and 1984

1970 base price Current prices

Ethnic group 1979 1984 Average 1979 1984 Average growth rate growth rate1980–4 (%) 1980–4 (%)

Bumiputera 296 384 5.3 492 852 11.6Chinese 565 678 3.7 938 1,502 9.8Indian 455 494 1.7 756 1,094 7.7

All ethnic groups 417 494 3.4 693 1,095 9.6

Source: Department of Statistics, Labour/Household Income Investigation (1980); HouseholdIncome Investigation (1984).




targeted. The Fifth Malaysia Plan (1986–90) reported that despite improve-ments in the national poverty level and the reduction of income disparity,achieving NEP targets of a 30 percent Bumiputera equity ownership anderadication of poverty by the end of the policy period were unlikely. In

February 1991, Prime Minister Mahathir Mohamad introduced Vision 2020, along-term plan which provided a framework for achieving socio-economictargets within a 30-year time period. Medium-term targets were set when theSixth Malaysia Plan (1991–5) (Malaysia 1991) was embodied within theOutline Perspective Plan 2 (OPP2), a blueprint which encompassed a 10-yeartime frame for unified development towards 2020, outlining the targets for visible accomplishments. As part of OPP2 and to continue the efforts of thegovernment in achieving further reduction in poverty levels and incomeinequality, 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, employ-ment in the public services, placement in higher education establishments,licences and scholarships. However, a major feature of the NDP was that it setno time frame for the attainment of the 30 percent Bumiputera ownership

target, and priority was instead placed on a 7 percent annual growth targetbelieved necessary for Malaysia to achieve “an economy that is competitive,dynamic, robust and resilient.” The NDP also aimed to set the pace to enableMalaysia to become a fully developed nation by the year 2020.

The new policy reiterated the government’s commitment to the economicliberalization measures introduced in the mid-1980s. Its new dimensionscomprised:

1 Attempts to eradicate hardcore poverty while at the same time reducing

relative poverty. “Hardcore poverty” was estimated using half the poverty-line income, which in 1995 was RM425 per month for a household size of 4.6 in Peninsular Malaysia, as a benchmark.

2 The development of an active Bumiputera Commercial and IndustrialCommunity (BCIC).

3 Greater reliance on the private sector’s involvement in the restructuringprocess.

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 alreadyachieved during the NEP period and this enhanced the growth momentum to




bring about a better distribution of income. However, a main difference in thisnew policy was that owing to the improvements in poverty levels over theprevious 20 years, the NDP would encompass methods that would ensure thatpoverty alleviation programs were targeted to the most poverty-stricken group

of the population as a whole, regardless of race. “Hardcore poverty” wasprioritized and this step was made possible because the NEP, although notentirely successful in achieving its targets, had managed to secure a platformfrom which economic growth and income distribution policies could beeffectively implemented.

In an attempt to move away from a planned economy and allow marketforces to determine demand and supply of goods and services, the governmentlaunched numerous programs and schemes to encourage and develop a widerstrata of entrepreneurs, especially among the Bumiputera. The implementa-

tion of the BCIC programmes gave Bumiputera entrepreneurs an opportunityto gain a strategic foothold in business and industry through the implemen-tation of schemes such as the vendor development program, the franchizedevelopment 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 decliningsignificantly from 42.4 percent in 1976 to 13.5 percent in 1993. The “hardcorepoverty” rate had also declined from 19.6 percent in 1976 to 3 percent in 1993.Reflecting the progress achieved in poverty alleviation, the mean monthlyhousehold income for Malaysia in current prices had, in general, improvedfrom RM505 per month in 1976 to RM1,563 per month in 1993. Governmentallocations for the “hardcore poverty” programs in 1993 were RM280 million.The number of poor and “hardcore poor” households in Malaysia wasconsiderably 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 4.0 2.2

Urban 24.6 12.6 7.5 4.1Rural 58.6 37.7 21.8 6.1Overall 49.3 29.2 17.1 9.6

Source: Malaysia’s Socio-Economic Development (Presentation Slides), Economic PlanningUnit, Prime Minister’s Department, Kuala Lumpur (1996).




Bumiputera Commercial and Industrial Community

The new dimensions of the NDP also emphasized the acceleration in thegrowth of an active Bumiputera BCIC. In an effort to create an active BCICcapable of competing in strategic industries and sectors of the economy,

several new entrepreneurial development programs were introduced whilethe practice of allocating a portion of new issues of corporate equity toBumiputera investors was continued. Between 1991 and 1995 the ownershipof share capital of limited companies rose considerably among the Bumiputera, with an average annual growth rate of 12.1 percent. However, despite anequity ownership that was 77 percent higher in 1995 than it was in 1990, thegovernment felt that the figures still demonstrated an inadequate Bumiputerashare in corporate equity. This was primarily owing to the rapid growth in theacquisition of corporate equity, particularly by foreigners, consistent with therelaxation in regulations pertaining to corporate ownership introduced toattract foreign direct investment (FDI). The non-Bumiputera also reaped thebenefits of a larger total corporate equity, which increased from RM108,377.4million 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 onlyrewarded the Bumiputera. Non-Bumiputera ownership of share capital grewsignificantly, and a negative growth was apparent only in the case of the trustagencies which was in line with the government’s move to reduce state intervention in the share allocation programs.

As part of the BCIC program, the government in the Seventh Malaysia Plan(1996–2000) continued efforts to assist the entry of Bumiputera entre-preneurs into the business sector by providing one-off assistance in the formsof training, research and development (R&D) and technical support, creditand business infrastructure facilities and product promotion. JVs amongBumiputera, non-Bumiputera and foreign entrepreneurs were also animportant 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 12.1Individuals and institutions 16.8Trust agencies –8.2Non-Bumiputera 9.0Chinese 8.3Indians 20.6

Others 35.1Foreigners 12.6Nominee companies 10.2Total 10.7

Source: Malaysia (1996).




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

Higher education policies in Malaysia

Education was another important area during the NEP period. As in mostdeveloping countries, improving human capital was a main objective, as wellas improving “the quality of education for the building of a progressive societyoriented towards modern science and technology” (Malaysia 1971). Highereducation was an important tool for achieving policy targets, as a key policymeasure 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 keymeans of developing human capital and expertise. One of the fundamentalaims of the plan was the promotion of equal opportunities for people of allraces to benefit from the modernization of the economy. Education was seenas a powerful measure in reaching this aim and its development was given

priority to insure availability and wider access. Higher education was a verysalient equity issue as it was often perceived as a means of restructuringMalaysian society to eliminate the identification of ethnic communities withrestricted 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 toinsure greater Bumiputera representation in various professions andoccupations in the modern sector, the government implemented a racial quotasystem: the ethnic composition of the students in the universities and faculties was to reflect the ethnic composition of the country as a whole. Whenadmission 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 UniversitiesColleges Act whereby universities and tertiary institutions had to admit moreBumiputera students to redress the chronic imbalances between the Bumi-putera and non-Bumiputera (Malaysia 1975). There is presently a 55:45percent Bumiputera:non-Bumiputera quota system in local public institutions.




This step was not taken without opposition; opponents argued that it wasa biased and unfair university entrance selection system, leading to lower

educational standards. Selvaratnam (1989) believes that the implementationof 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 Bumiputerastudents in University Malaya was less than half of the total student popula-tion and Chinese students were the majority. By 1985, the pattern haddrastically changed: 63 percent of the students were Bumiputera and morethan 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; theseoffered employment-related courses such as accountancy and admittedmainly Bumiputera students. This illustrates the greater opportunitiesavailable for Bumiputera students, but their placement was at the expense of the Chinese and Indians. Each year thousands of Chinese students go abroadfor their tertiary education, creating deep resentment owing to the high costsinvolved. However, in the mid-1990s the government decided to let foreignuniversities 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 percentof the total number of students in local universities in 1990 to 12,700 or 20.5percent in 1995. In technical-type courses, there was an increase from 3,835students in 1990 to 5,500 in 1995. Out of a total of 50,600 Malaysian studentsstudying abroad in 1995, about 20,000, or 39.5 percent, were Bumiputerastudents, 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 studentsresulted in polarization of the races rather than racial harmony. Many

Table 9.9 Racial composition of university students, 1966–7 and 1985

Bumiputera Chinese Indians and others Total

University Malaya 1,038 2,034 521 3,603

(1966–7) (%) 28.8 56.5 14.7 100.0 All Universities 23,841 11,241 2,756 37,838(1985) (%) 63.0 29.7 7.2 100.0

Source: Karthigesu (1986).




academically qualified non-Bumiputera are denied entry into local universitiesand 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 studentsstudying overseas, 73.4 percent were non-Bumiputera who had failed to gain

admission to local public institutions of higher learning or who had beenoffered places in courses not of their choice. Lee (1996) believes that polar-ization was perpetuated as a result of different ethnic groups seeking highereducation at different institutions.

A further dichotomy exists within the Bumiputera: results of governmentexamination equivalent to Britain’s O and A Levels show that among thetop 10 percent, Malays number only 3 percent and of the bottom 20 percentthey account for almost 80 percent (Ungku Abdul Aziz 1989). Aziz believesthat 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 Malaycommunity between the English-educated, urban-born and bred and theMalay-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 likelythan a poor one to be awarded a scholarship. They show that intra-Malayinequality of opportunity in higher education is significant, and conclude thatscholarships are regressively distributed among all ethnic groups, favoringricher households. Selvaratnam (1989) believes that this implies that the

scholarship policy has contributed to reproducing and maintaining a socio-economic stratification within the Malay community, rather than promotingthe upward social mobility of the poor Malays. This inevitably leads to a‘dualism’ within the Bumiputera themselves as well as Malaysians in highereducation as a whole.

The educational policies adopted during the NEP period can thus be seen tohave had both positive and negative repercussions. The policies permittedincorporation of a greater number of students into the higher educationalsystem, both locally and abroad, which led to a higher trained workforce.

However, a policy which was formulated to solve a problem of racial crisis andinequality paradoxically resulted in a more divided Malaysian community atboth an inter-ethnic and intra-ethnic level. The dualism that exists as a resultof the government-assisted steering of educational paths for the differentraces as well as within the Bumiputera community itself has led to a moredivided nation with different mentalities and perspectives. While the impact isnot seen in terms of violence or tension, it propagates a a dichotomy akin to aclass 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 atthe expense of meritocracy and international competitiveness, as well as acooperative and integrated Malaysian society.




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 tomore than half of its level in 1970, and by 1987 rural poverty had decreased by36.3 percent and urban poverty by 13.2 percent, resulting in a total reductionof well over 30 percent for the entire population. In terms of the second prongof the policy, wealth restructuring among the races, the Fourth (Malaysia1981) 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 desiredoutcome. It is possible to downplay the significance of the figures, especiallysince Malay urbanization increased from 27 percent in 1970 to 37 percent in1985. Furthermore, the population composition of the country has evolved; with the Chinese sending their capital and young abroad, it is difficult toascertain the extent to which the increase in Malay income percentage can beattributed to the policies undertaken during the NEP period.

In his book The Malay Dilemma, Mahathir Mohamad (1970) was fixated onestablishing a middle-class Malay entrepreneurship. The NEP was seen as amechanism of channeling state-owned enterprises into the hands of a largerproportion of the Bumiputera which would then ostensibly lead to an equalitybetween the races. The 1975 Industrial Coordination Act (ICA) madeunexempted companies ensure that there was at least 30 percent Bumiputeraparticipation in their ventures. Specific projects approved by the Governmentqualify for an exemption, such as acquisitions by ministries and governmentdepartments, by Ministry of Finance Incorporated, by Menteri Besar Incor-porated, and by State Secretary Incorporated, and privatization projects, whether at the Federal or State level, are considered as approved by theGovernment and therefore exempted from the guidelines of the ForeignInvestment Committee governing the ICA. An investigation by Yasuda(1991) on the effects of the ICA on the Bumiputera between 1975 and 1985discovered that Bumiputera ownership of corporate stock grew from 2.4percent in 1970 to 7.5 percent in 1975, and from 12.5 percent in 1980 to 19.1percent in 1985.

Table 9.10 Malay median income as a percentage of Chinese median income,1970–84 (percent)

1970 1973 1976 1979 1984

44 45 44 47 57

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




However, what is seldom mentioned are the NEP ground rules that wereestablished to prevent bloodshed. Few Malaysians, Malays or otherwise,challenge the notion that Malaysia is a Malay-dominated country where thepolitical 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, providedthey do so with a Malay partner. This gives the minorities a non-violent avenuefor their energies and also provides Malaysia a chance to learn the businessskills of their Chinese partners (Pillai 1996). A phenomenon generally knownas the “Ali Baba business concept” began during the NEP period where inthe early 1980s, despite a considerable number of Malays obtaining toppositions in major corporations, their contributions to the businesses were often nominal. Most of the Malays who were active in the corporatesector 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 overallstandard of living in the country during the NEP period, while absolutepoverty was reduced and inter-ethnic inequality improved. Overall, inter-ethnic income inequality was reduced, the Gini coefficient decreasing from0.50 in 1970 to 0.46 in 1987. The implementation of the NEP was not withoutits share of costs, however. Although it cannot be denied that the NEP wasrelatively successful in reducing poverty and ameliorating inter-ethnic income

inequality, it also led to an exacerbation of intra-ethnic income inequalityamong the Bumiputera. Puthucheary (1984) finds that among Malays, theincome share of the top 10 percent rose from 42 percent to 53 percentof 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 sub-standard and subsidy-dependent Bumiputera community, an example being in

the quota system and scholarships granted in the education system which hasled to dualism at both an inter-ethnic and an intra-ethnic level.

Osman-Rani (1990) believes that the effects of the NEP also include thecreation of a rentier entrepreneurial class based more on political connectionsthan 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 frequentlybeen used to characterize the modus operandi of the Malaysian government

and large corporations often, but not necessarily, fronted by Malay business-men with important political connections. There also has been an increasedresentment among the non-Bumiputera for whom the achievement of theNEP objectives has been costly and discriminatory. The Chinese believe thatthe NEP quota system should be abolished and government intervention in




favor of one ethnic group hostile towards them ended. In the words of Suhainiand 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 arestill not many Chinese senior officials, diplomats, soldiers or policemen;the Indian share of the corporate sector remains a little over 1 per centafter 20 years of the NEP, and some 96 percent of the landless settled onnew 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 sectorfields of doctors, dentists, engineers, accountants, architects, and lawyers,although between 1990 and 1995, the average annual growth rate of theBumiputera in both public and private sector accountancy, medicine, law, andsurveying 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 List’s venerable “infant industry” argument. The positive discrimi-nation applied in the policy can be likened to domestic infant industries beingawarded special protection from international competition in terms of tariffs,subsidies and embargoes. To assist in creating a Bumiputera commercial andindustrial community, the government participated directly in commercialand industrial undertakings. This was carried out through joint ventures (JVs) with the private sector and wholly owned enterprises, by constructing businesspremises, investing directly in productive commercial and industrial enter-prises which were to be controled and managed by the Bumiputera and

promoting in-service training programs and other activities covering financialand technical assistance.

An unavoidable outcome has been a proliferation of state-owned enter-prises (SOEs), especially “state-owned companies,” established under the 1965Companies Act (Osman-Rani 1990). These include PERNAS and the PNB which have powers to establish subsidiaries to allow them to vary ownershipstructure in accordance with the requirements of the NEP (Puthucheary 1984).

The justification for these agencies can be found in Skrentny’s (1996) argu-ments 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 andefficiency would be persuasive in the advocacy of a controversial if notillegitimate model of justice. The answer requires attention be paid to the




broader historical context of the civil rights enforcement agencies . . .administrative agencies themselves were created as part of an increasingemphasis on the efficient realisation of a just society, on solving socialproblems. The raison d’être 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 parlia-mentary scrutiny, which results in an inefficient system which could proveuncompetitive and dampen economic growth.

As the infant matures . . .

Like any infant industry, government support has to cease at a certain point toprevent 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 itsindefinite extension, albeit under another name and focusing on differentpriorities. The flexibility of the NEP and NDP has allowed the economy tomature and evolve into a more open economy with a more global outlook.Malaysian economic policy makers are now more influenced by internationaleconomic affairs in shaping their views by concentrating on FDI, increasing

global competitiveness and an export-oriented economy. One of the mostimportant changes that affected the role of Malaysia’s economy was the Plaza Accords agreed to by Japan and the USA in 1985, which realigned dollar–yenexchange 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. Withthe opening of Communist economies such as China and Vietnam to foreigninvestment, 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 alsopermitted greater regional trading, especially in the oil markets industry.

Stafford (1997) believes that the desire to take advantage of global oppor-tunities and the need for greater operating efficiency also led the governmentto take a more liberal approach in supporting Malaysia’s own companies, bothat home and abroad. The country’s small domestic market necessitatesinternational competition in order to survive. The implementation of the Asean Free Trade Area (AFTA) in the 1990s further increased the need for arobust economy able to compete regionally. In response to the dynamism of

the regional economy, the government took a more ethnically neutral stancein supporting Malaysian companies overseas and locally by relaxing theIndustrial Coordination Act. Owing to the need for local companies to beregionally competitive the government, despite its continuation and supportof Bumiputera businesses and entrepreneurs, has been forced to alter itsNEP-era views to meet the challenges of a more open economy.




Has the NEP failed?

The NEP, and its successor, the NDP, were tools utilized as a response to theracial tensions and economic disparity that were prevalent at the end of the1960s. As a vision it was a structured plan to resolve the main overriding social

tensions while at the same time taking care of the economy’s needs, preparingthe nation for its race in a competitive global economy. On the whole, theagenda was carried out beyond its main two prongs, encompassing humanresource development (HRD), privatization policies, public sector financing,regional development, industrial development, agricultural growth, energy,tourism and science and technology policies, among others. But the emotionaland philosophical maturity of a country is something that cannot be easilyquantified, much less planned at a national level. It is a by-product of all thestructured policies that have been planned, yet plays an important role indetermining 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 acountry which is at a developing stage, without strong political backing andsupport. The two issues are strongly bound together and Malaysia has notbeen spared external pressures. The 1998 dismissal of then Deputy PrimeMinister Anwar Ibrahim sparked significant social unrest, resulting in theformation of new Opposition party which gained the biggest support ever inMalaysian history for a non-ruling political group. This, together with severalmajor failures of companies that have a reputation of being given politicalfavor by the Government, led to a loss of confidence in and credibility of theMahathir government. The government buy-out of Malaysia Airlines in 2001and the subsequent collapse of Renong, companies which were managedby NEP “baby-boomers,” demonstrated the fundamental weaknesses stillprevalent 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 fullymature and embark upon the life cycle of social development – not unlike arowdy teenager evolving into a mature adult, going through a period of criticism, making some necessary mistakes and eventually aware and acuteenough to acquire social maturity. Not all governments which permit suchfreedom produce a more coherent and mature population, but perhaps createone that is more perceptive, which is one of the unmeasurable qualities of thehuman development index (HDI).

The growth plan of a country as diverse and fragile as Malaysia should betwo-pronged – economic as well as social. Social policies should go beyond theobvious issues already covered in Malaysian Plans – they should also cover thefreedom 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 fullyeconomically developed and as competitive as First World countries, whilenot allowing the population to “ripen” and evolve to adjust to economic




liberalization. As illustrated earlier, there is already a dichotomy betweenlocal- and foreign-educated students. Apart from the typical “brain drain”prevalent in many developing countries, many are frustrated at their inabilityto 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 andthinking, they have little choice but to borrow from others, and there are a lotof examples to follow, not all of which are healthy. Foreign influences aboundand the “MTV culture” is typified in the younger generation, many of whomare 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 eatbetter, live longer and are better educated, but they do not have any morepolitical freedom than their fathers did, nor any more original thoughts. Thesefactors 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 statusof a “developed nation.” There is a lot to learn about how such a multi-ethnicsociety 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 areilliterate and most live longer, there is a danger of too high a dependencebeing placed on the Government to determine economic and market forces,

thus hampering Malaysia’s chances of competing on the international front.The private sector, required to be competitive, is always the best representa-tive in the global market, for it can generate enough funds and profit for newinvestments, R&D, and growth, money that the Government should berequired to spend on public amenities such as health and utilities. Prolongedsupport 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 bymarket competitiveness but by a life support machine; this is the key aspect which needs to be addressed and rectified.

The criteria for judging the NEP’s success rate have to be clearly defined.The second prong has obviously been achieved. The first, however, has back-fired. Given the current trepidation felt on the global economic front and thebuy out and collapse of two major Bumiputera companies, it is becoming moredifficult for the government to remove this support without defeating its firstNEP objective – a more equitable redistribution of income. With a lowerpercentage of Bumiputera ownership in the country’s corporate wealth, will theissue 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 theable from the weak, the self-reliant from the dependent. The Bumiputeracommunity cannot deny that it has not been given a chance to compete againstthe Chinese, yet it cannot claim that it has utilized this opportunity with the




wisest of decisions. The NEP is still an ongoing process whose success rate canbe determined only in the future. The 2020 Vision sounds good on paper, butMalaysia is still a long way from reaching the maturity levels so beautifullyexpressed in the country’s “wish-list” of long-term desires.

References

Chin Ung Ho (2000) The Chinese of South East Asia, Minority Rights Group, London.Department of Statistics (1989) Statistical Handbook, Government Printer, Kuala

Lumpur.Economic Planning Unit (1991 ) Privatization Masterplan, National Printing

Department, Kuala Lumpur, 3.Gomez E. T. and K. S. Jomo (1997) Malaysia’s Political Economy: Politics, Patronage

and Profits, Cambridge University Press, Cambridge.

Hashim, M. S. “Problems and Issues of Higher Education Development in Malaysia,”in Y. H. Yip (ed.), Development of Higher Education in Southeast Asia, Table 8,63–4.

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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, 36–7, 40, 41, 43, 44, 45, 70–89aborigines see aboriginals ABSTUDY 71 Actual Situation of Life Study (Japan) 135 Adivasis see scheduled tribes; tribalsaffirmative action 2, 53, 57, 65, 79–80, 81, 85, 86,

88n.8, 88n.10, 88n.15, 96, 106, 112, 123, 124n.3,169–70

Africa 4, 78 African Americans 53–67, 144, 148; see also blacks Afro-Brazilians 9, 14–25; see also blacks Afro-Canadians 38–40; see also blacks Agricultural Bank of Malaysia 156agriculture 113, 152–3, 170 Akerlof, G.A. 115–17, 125n.6alcoholism 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, 7amerelos 17 Americas 4 Anderson, B. 65 Andrews, G.R. 25n.3 Ang, I. 96anti-discrimination laws 56apartheid 72 Araújo Costa, T.C.N. 15 Armed Forces Qualifications Test (AFQT) 54,

55–6, 65–6 Armed Forces Vocational Aptitude Test (ASVAB)

55 Armentrout, K.S. 56 Arrow–Debreu model 115 Arthur, W.S. 77artisans 131 ASEAN Free Trade Area 170 Asian financial crisis 171 Asians 82, 86 Ati-Sudras see Dalitsatrocities 122–3 Australia 1, 3, 10, 70–89 Australasia 148 Australian Bureau of Statistics 71, 72, 76–7, 78,

86n.2

Australian Parliament 88n.12 Ayrans 6–7, 124

Baer, W. 15Bahía (Brazil) 15–25Baker, M. 40, 48n.3Balkan crisis 1

Banerjee, B. 121–2, 126n.17Bank Bumiputera (Malaysia) 156Bank Pembangunan (Malaysia) 156Bardhan, P.K. 124n.4Beaujot, R.P. 48n.1Becker, G.A. 115, 125n.6Belize 1, 3Benjamin, A. 40Beppu Oita Prefecture (Japan) 137Bhakti movement 117Bhattarcharjee, D. 121Black, D.A. 68n.2Black Power 53blacks 2, 10, 14–25, 38–40, 52–67, 86, 144, 148Blinder-Oaxaca decomposition 22–3, 25n.6, 35–48Borjas, G. 61–2Borland, J. 58Bound, J. 58Bourke C. 71Brahmins 7–8, 114, 120, 125–6n.15Bratsberg, B. 57Brazil 9, 14–25, 101, 106, 125n.14Brazilian Demographic Censuses 17–25Breslaw, J.A. 48n.5Breton, R. 37, 38, 48n.6

British Canadians 27–48British colonization 152–3Bucci, G.A. 122Buddhism 131–2, 138bumiputera see Malays, native (Malaysia)Bumiputera Commercial and Industrial

Community 161–4“buraku hunts” 137–9Buraku Liberation League 11, 130, 133–4, 137,

138–42, 146–7, 148, 148n.1, 148n.8, 149–50n.17,150n.19

buraku liberation movement 11, 130, 133–4, 138–42Buraku Liberation News 142, 146–7buraku lists 137–8, 145, 149n.4, 149n.6, 149n.12,

149–50n.17burakumin 5, 11, 130–50Burden, J. 71Burundi 2, 5Bush, G.W. 85Byrne, B. 17

Cacon, N. 37Canada 1, 3, 4, 9–10, 27–48Canadian censuses 28–35cancer 71capitalism 120Captain Cook 72

Carvalho, J.A. 14, 15casinos 74caste 2, 3, 5–9, 10, 112–26, 131caste inequality see caste“Caucasian type” 8Central Provident Fund 98Chamars 113



176 Index

Chambers, R. 124n.4Chanra, V.P. 121Chaterjee, P. 124n.2Chaubisa, M.L. 122–3Chaubun, S.N. 120Chaykowski, R.P. 48n.3Chicago School 115, 125n.6China 147, 170Chinese Canadians 38–42Chinese Development Assistance Council

(Singapore) 99, 107, 108–9n.19Chinese Malaysians 11, 152–173Chinese Singaporeans 94–110Chitnis, S. 123Chopra, P. 123Christianity 2Christofides, L. 48n.6Civil Rights Act of 1965 (USA) 53, 80Civil War (USA) 80class stratification 63–4, 77, 101, 104–5, 166,

168n.10Clinton, W.J. 79, 80, 85coal mining 146coffee production 15, 24n.2cognitive skills 10, 53, 55, 56–7color 3–4, 5–9, 14–25, 28–35commerce and industry 153, 156, 169Commonwealth of Australia 77, 79, 80, 82, 84, 86,

88n.9communal conflict 154Communist Party (Japan) 133, 140commuting distance 63, 64Companano, M. 15compensating differentials 119–20compensation see reparationscompensatory discrimination 96Conerly, W. 88n.18conjunctivitis 71Consorte, J.17Constitution (India) 112–13Constitution (Malaysia) 153, 154consumption 122, 123credit discrimination 120–1Croatia 1“crony capitalism” 168Croson decision (USA) 88n.11culture 56, 62–4, 95, 97, 101–2

Currie, J. 55Cutler, D.M. 64

Dalits 6, 8, 113–14, 118, 119, 124n.1, 124n.3, 148Daly, A.E. 74–5, 76–7, 86Darity, W. Jr. 1, 17, 52–3, 56, 62–3, 65, 66, 67, 68n.1,

68n.6, 78, 123, 124, 125n.13Darwin (Australia) 72, 86Dasas 7Dearborn (USA) 64decomposition see Blinder-Oaxaca decompositionDegler, C. 24n.3Delhi (India) 121democracy 171denunciation processes 133, 139–42, 148, 149n.12Department of Education, Training and Youth

Affairs (Australia) 71Department 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, 39Dhesi, A. 121, 126diabetes 71Diet, The (Japan) 143Dietrich, J. 62–3, 66disabled, the 4discrimination 133, 137–9, 141, 142–5, 168, 169;

statistical evidence 2–3, 4, 9–10, 14–25, 35–46,52, 64, 121–8; theories of 115–17, 118

District Court of Osaka (Japan) 141District Court of Takamatsu (Japan) 137Dobson, M. 72–3, 88n.7Doi Moi 170Donoghue, J.D. 130, 133Dougherty, C. 39 dowa districts 134, 135, 142, 144, 146, 148, 149n.4,

149–50n.17Dravidians 124Driedger, L. 48n.1Dumont, L. 120, 124n.2

East Indian Malaysians 153–4, 157–60, 163–6East Indian Singaporeans 94–110economic growth 2, 15, 94education see schoolingEmancipation Edict (Japan) 133, 146, 148Employment Equity Act of 1986 (Canada) 4, 34–5Equal Employment Opportunity Commission

(USA) 145equal opportunity 93–4, 96–7equity restructuring 155–6, 158–64, 167, 172–3Eritrea 1, 3eta 130, 131, 137, 138, 146, 148Ethiopia 1, 3, 4ethnic capital 61–2ethnic conflict 165–6ethnicity 4, 27–48eugenics 108n.9Eurasian Association (Singapore) 99Eurasians (Singapore) 94–7Euro-Australians 72Euro-Brazilians 9, 14–25eurocentricism 75Europe 4, 72Europeans 148exchange rates 170exclusion 62–3

“fair” equal opportunity 93–4, 96–7, 103Fairlie, R.W. 58family effects 56, 63–4, 66farmers 131Feagin, C. 78Feagin, J. 78, 88n.8, 88n.10, 88n.15Federal Agricultural Marketing Authority 156Federation of Malaya 108n.14feudalism 120Fifth Malaysia Plan 167fishing 153Fodor, E. 10Fourteenth Amendment (USA) 80Fourth Malaysia Plan 167France 78free rider problem 117French Canadians 27–48

Gaiha, R. 124n.4Galanter, M. 123



Index 177

Gandhi, M.K. 116Gangopadhyay, S. 124n.4gays see homosexualsGebara, A. 25n.2Gender Development Index 1Gender Empowerment Measure 1gender inequality 1–2, 17–19, 25n.5, 38, 44–5, 72–3General Social Survey (USA) 61–2genetic explanations for inter–group inequality

53–4, 95, 103–4, 108n.9, 132–3geographic variations 8, 14–25, 111George, P. 36Germany 78ghettos 134, 138, 145Ghurye, G.S. 8Gingrich, N. 85, 88n.18Gini coefficients 94, 107n.6, 158–9, 168Glaeser, E. 64Glazer, N. 150n.8Goldsmith, A. 63

Graham, D.H. 14, 16, 25n.2Gray, A. 89Great Depression, The 27Green, A.G. 48n.1Green, D.A. 48n.1Gregory, R.G. 74–5Groemenr, G. 131Grogger, J. 64Guilkey, D. 62–3, 66Gujarat (India) 122Gunderson, M. 48n.4Gupata, D. 124n.2

Haessal, W. 42Harado, T. 149n.8“hard core” minorities 123, 130, 148, 149n.2Harris, L. 88n.10Harris, M. 17Harrod-Domar model 155Hashim, M. 165Hawke, A.E. 76–7health outcomes 71, 136Heckman, J. 53hepatitis 71Herrnstein, R. 53, 54High Court (Australia) 84, 88n.7High Court (Osaka, Japan) 141

Hill, M. 108n.10,108n.12, 109n.20, 109n.22Hinduism 2, 3, 5, 95, 111, 117, 122, 123n.1Hing, A.Y. 168hinin 130–2, 146, 148Hinks, T. 10Hoff, K. 115, 125n.6Holzer, H. 58homosexuals 85, 88n.17hookworm 71Horatio Alger story 120Housing and Development Board (Singapore)

100–1, 106, 109n.20, 109n.21, 109n.23, 109n.24,109n.25, 109n.26, 109n.27

Howland, J. 42Hum, D. 38, 48n.5human capital 60–2, 121, 164–6Human Development Index 1Hunter, B. 75, 76–7Hutus 2

Ibrahim, A. 171

identity 15–17, 34–5, 96, 115–17, 134, 145–7Imani, N. 78immigration 25n.2, 27–34, 86, 94, 96, 106n.7, 122,

153, 165–6Immigration Act of 1953 (Canada) 27Immigration Act of 1967 (Canada) 28Immigration Act of 1978 (Canada) 28imperfect information 115, 122imprisonment 71income distribution 94, 155, 158–9, 168income inequality 1, 71–2, 94, 104–5, 122–3, 136,

155, 158, 168Independence (India) 112, 120Independence (Malaysia) 153index of dissimilarity 25n.5India 1, 3, 5–9, 10, 78, 101, 112–126Indian Malaysians 154, 159–60, 165indigenous peoples 9, 10, 17, 25n.4, 36–7, 40, 41,

43–4, 45, 70–89, 148, 152–73Indigenous Trust Council see Majlis Amanah

RakyatIndustrial Coordination Act of 1975 (Malaysia) 167,170

industrialization 15, 125n.14, 133, 157infant industry 169, 170infant mortality 71integration 101, 109n.26, 109n.27, 146–7intelligence and race 53, 57inter-generational mobility 61–2, 68n.3inter-group inequality 19–22, 35–48, 52–67, 71–5,

94–5, 104–5, 111, 114, 134–9, 144, 152–4,158–64, 167

inter-marriage 137, 145–7, 150n.18Ireland 78Islam 2, 5, 97–8Israel 1, 3, 4

Jain, M.K. 122–3Jajmani matrix 118–19Jajmani system 119, 125n.9Jakarta (Indonesia) 94Jamaludin, F. 11Japan 1, 3, 5, 11, 130–50, 170Japan Government Somucho 135, 144, 146,

149–50n.17Japanese Koreans 147, 150n.19Jatabs 121

jatis 7–9, 114Jayamaran, R. 121, 124–5n.5Jayaraj, D. 122, 123Jim Crow 62–3 job tenure 57–8Junankar, P.N. 77, 86

juvenile justice system 71

Kain, J.F. 64Kalbach, W.E. 48n.1Kanbis 122Karnataka (India) 123kawata see etaKenya 122Kerala 8Kidd, M. 48n.3Kinta 153Kirasawa, Y. 130, 131, 134, 143, 149n.14Kitaguchi, K. 138Klass, M. 7, 8Knight, J.B. 121–2, 126n. 17



178 Index

Koreans see Japanese KoreansKosambi, D.D. 7koseki records 138, 149n.7Kowarick, L. 15Kranton, R. 116Krishnan, P.S. 122–3Kshatriyas 7, 114Kuala Lumpur (Malaysia) 154–5Kuhn, P. 36, 37Kuo, C.Y. 36Kuran, T. 117Kush, J. 42kyadan toso see denunciation processesKyoto (Japan) 146Kyriazis, No. 9, 42

labor force participation rates 72, 107n.6Labor Standards Act of 1947 (Japan) 149n.9Lai, A.E. 108n.12, 109n.27Lakshmanasamy, T. 122

Lal, D. 117, 125n.6Land, J. 17landlessness 119, 123n.1, 131land ownership 72, 88n.7, 119, 121land reform 119, 125n.12Lanjouw, P. 120–1, 124–5n.5, 125n.10Larat 153Latinos 58leatherworkers 131–2, 138Lee, K.Y. 95, 102Leonard, J. 65Leveler’s Society see ShuheishaLevy, F. 55Li, T. 106, 108n.10, 108n.13Lian, K.F. 108n.10, 109n.20, 109n.22liberalization 170Life Style Research Survey (Japan) 146linguistic variation 5, 33–6, 101, 105, 107n.1, 107n.2List, F. 169“Look East” policy 156–7Loury, G.C. 53, 130Lovell, P. 9, 125n.14low status minorities see “hard core” minoritiesLui, J. 76–7, 86

McKeever, M. 10Mackenzie District (Canada) 36

McLauchlin, A. 135, 148n.1McVay, W.A. 49n.1Madhaswaran, S. 5, 122Mahathir, M. 156–7, 161, 167, 171Majlis Amanah Rakyat 164, 165Maki, D. 48n.5Malays, native: (Malaysia) 11, 152–173; (Singapore)

94–110Malaysia 1, 2, 3, 4, 11, 152–73Malaysia Airlines 171Malaysian Chinese Association 154Malaysian Indian Congress 154Manadarin 105Marathi 124n.5Masayuki, T. 141Mason, P. 10, 52, 56, 63, 64, 65, 68, 68n.1, 68n.6Mayes, A. 112–13Mayoux, L. 120–1Mead, L. 52, 55Meerman, J. 5, 111, 123, 131, 147, 149n.2Mehmet, D. 166

Meiji regime 133Mencher, J. 112, 124n.1Mendaki 97–9, 106–7, 108n.15, 108n.17, 108–9n.19Menteri Besar Incorporated 167merchants 131meritocracy 20, 61–2, 93–110, 166middle classes 3, 146Middle East 78migration 122, 146military 85Miller, P.W. 48n.4Milne, R.S. 152Ministry of Finance (Malaysia) 167Ministry of Justice (Japan) 137, 138minorities 2, 4, 28–48, 123, 130, 168Mishra, G.P. 122Mohan, R. 124n.4“Mongoloid” type 8Montonori, T. 150n.20Moore, R.D.Q. 10

Moore, S. 71“mulatto escape hatch” 25n.3mulattos 14–25multiculturalism 34–5multiethnic society 152“multiracial meritocracy” 10, 93–110Murnane, R. 55Murray, C. 53, 54, 55Myers, S.L. Jr. 10, 65, 75, 76, 78, 88n.10, 88n.15,

125n.13

Nafziger, E.W. 120National Census of 1872–3 (Japan) 149n.6National Committee for Buraku Liberation 133National Corporation (Malaysia) see PERNASNational Development Plan (Malaysia) 160–4, 166,

167, 169, 170, 171National Equity Corporation (Malaysia) see PNBNational Front (Malaysia) 154nationalism 96National Longitudinal Survey of Youth (USA) 54,

58, 61National Sample Survey (India) 122National Share Ownership Trust see Amanah

Saham Nasionalnative Americans 2, 72–5, 85Nayak, V. 13

Neary, I. 133, 141, 142, 144“Negroid” type 8neighborhood effects 61–2, 66, 106Nembhard, J. 1neoclassical economics 75–6, 115Nepal 3Nesiah, D. 133“new common citizens” 133New Economic Policy (Malaysia) 11, 152–73New South Wales (Australia) 73, 88n.4New Zealand 1, 3Ng, S.K. 166N Levels 102“non–racial democracy” 88n.14North Africa 78North America 4Northern Territory (Australia) 73, 88n.4

Oaxaca, R. 43occupational status 19–22, 62–3, 113, 120, 131, 132,

136, 152–4



Index 179

occupations, degraded 113–19, 131–4Oettinger, G.S. 58Office of Federal Contract Compliance (USA) 65Okano, K. 150n.20O Levels 102–3, 166Oliveira, L.E.G. 15Osaka (Japan) 136, 137, 143, 149n.13, 149n.15Osmani-Rani, H. 168Otake, E. 140Outline Perspective Plan (Malaysia) 155Outline Perpective Plan 2 (Malaysia) 161

Pacific War 133Palanpur (India) 124–5n.5, 125n.10Pan, I. 123Panandakar, P. 123pardos 15–25passing 2, 145–8Pathucheary, M. 168Patidars 121

Patrinos, H.A. 36patron-client relationship 119, 125n.11Pendakur, K. 41, 48n.6Pendaukur, R. 41, 48n.6Perak (Malaysia) 153PERNAS 156Perwaja 157Petterson, S.M. 52phenotype 2, 4, 5–9physical anthropology 5–9Piore, M. 75planning 115, 154–5, 171–2Platteau, J–Ph. 119, 125n.11Plaza Accords 170PNB 156Podberesky decision (USA) 88n.11polytechnics 104population growth 72, 118, 132Poracaro, R.M. 15poverty 73–5, 124–5n.5, 134–6, 154, 155, 156, 157–8,

161–2, 166, 167Prairies, The 27Prasad, S. 123prejudice 116–17, 139premarket factors 36, 53–7, 79, 121pretos 15–25Primary School Leaving Exam (Singapore) 102–3,

106–7, 110n.31privatization 167, 171proletarianization 124n.1Proton 157purchasing power parity 144, 149n.16

Queensland (Australia) 73, 88n.4quotas 88n.8, 88n.10, 164–5, 168–9

race 5–9, 9–10, 14–25, 66–7, 71–80, 94–110, 152–73;coefficient technique 54; riots 108n.2

Race Reconciliation Council (Australia) 85racial conflict see ethnic conflict“racial democracy” 8, 14racial inequality see inter-group inequalityracial theory of caste 6–9racism 6, 56, 75–80, 125n.13Ransom, M.R. 43Rao, V. 119–20Razak, T.A. 155–6reconciliation process 2, 70–89

regional variation see geographic variationsReitz, J.G. 37, 38religion 2, 4, 111remedies for inter-group inequality 3, 10, 78–9,

96–101Renong 171reparations 81–4, 86, 144–5reservations (India) 118reservation wages 58rice production 153Risley, H.H. 8Rodgers, W. 55, 56, 65Rohlen, T.P. 140Roosevelt, T. 24n.1Rose, D.B. 88n.5Rubber Industry Smallholders’ Development

Authority (Malaysia) 156rubber production 153, 156Rwanda 1, 2, 3, 4, 5

Sabol, W. 76Saggar, M. 123Sakellarious, C.N. 36, 42Salmond, A. 70samurai 131Sanders, W. 77sanskritization 121, 125–6n.15São Paolo 15–25scheduled castes 114–15, 120, 121–2, 123, 124n.3scheduled tribes 114, 122, 123, 124n.3schooling 17–19, 52, 53–64, 71, 97, 101–7, 108n.17,

108n.18, 108–9n.19, 133, 134–6, 142–4, 145,149n.7, 149n.12, 149n.14, 150n.20, 164–6

Scoville, J.A. 117–18, 199, 125n.10Sealord purchase see Treaty of Waitangisecond best, doctrine of 125n.8Second Malaysia Plan 154, 155, 164–5segregation 5, 11, 61–4, 100–1, 118, 130, 131, 133,

134, 138self-help 96–9, 106–7, 108n.14, 139Selvaratnam, V. 166Seventh Malaysia Plan 163–4Shannon, M. 48n.4Shantakumar, P. 110n.32Shapiro, B.M. 42, 48n.3, 48n.6, 48n.7Sharma, S.S. 122Sharp, N. 88n.6

Shinto period 131–2Shogunate 130, 132Shuheisha 133Sikes, M.P. 78Sikhism 117Silva, N. 17, 25n.3Singapore 1, 4, 10, 93–110Singaporean censuses 94, 108n.8Singapore Indian Development Association 99,

108n.18, 108–9n.19Singapore Institute of Management 104Singh, H. 121, 126n.16Sixth Malaysia Plan 161–2Skrentny, J.D. 169–70Smith, D.E. 77smoking 71social capital 60–2Socialist Party (Japan) 133social mobility 120–3, 132, 145–8social stratification 93–4, 95, 103, 124n.2, 152–4Somucho see Japan Government Somucho



180 Index

South Africa 2, 3, 10, 88n.14South African Truth and Reconciliation

Commission 80South America 4South Asians 38–42, 78South Pacific Islanders 82Sowell, T. 174Special Assistance Plan (Singapore) 104, 105Special Measures Laws (Japan) 133, 142–6, 148,

150n.17Spriggs, W. 55, 65Sri Lanka 4Srinivas, M.N. 125–6n.16Srinivasan, T.N. 124Stafford, G. 170stagflation 65State Secretary Incorporated (Malaysia) 167statistical theory of discrimination 58, 115–17,

122steel 157

Stelcner, M. 4, 9, 42, 43, 48n.3, 48n.6, 48n.7stereotypes 95, 106Stern, N. 120–1, 124–5n.5, 125n.10Stewart, J. 68n.6St. Jean, Y. 78stolen children 82–4, 87St K 70

Twine, F. 9

unemployment rates 58, 72–3, 153Ungku, A.A. 166United Malays National Organisation (Malaysia)

154United Nations Development Program 9United States of America 2, 3, 10, 52–67, 70, 77–9,

81, 101, 106, 107, 119, 125n.13, 144, 145, 169–70Universities and Universities College Act of 1971

(Malaysia) 164university education 103–5, 134–5, 164–5University of California system 88n.18University of Fine Arts (Japan) 137University of Malaya 164University of South Australia 71unobserved heterogeneity 36, 55, 56untouchables see DalitsUpham, F.K. 133, 134, 138, 139, 141, 142–3, 145,

149n.12

urbanization 73, 167urban–rural dichotomy 157–8US Civil Rights Commission (USA) 70Uttar Pradesh 8, 120

Vaidyanathan, A. 124n.4V ill t F 48 6