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Impact on Latino Socio-Economic Development JSRI Senior Research Associate
Many studies have analyzed income differentials among different population segments and evaluated their impact on socioeconomic development. More than 40 years ago, Simon Kuznets formulated his famous hypothesis which suggests that, at low levels of per capita income, inequality increases with rising per capita income and decreases only in the later stages of development, resulting in an inverted U-shaped relationship between per capita income and income inequality. This hypothesis is based on a model in which individuals migrate from a low-wage rural sector with little inequality to an urban sector characterized by high income inequality and high average income. Recent research has also identified a negative relationship between initial inequality and subsequent growth (Deininger and Squire, 1996). Another recent study shows how income inequality is negatively correlated with socio-economic indicator variables of family cohesiveness and community well-being (Robison and Siles, 1997). In recent years the Hispanic population in the United States has experienced a tremendous growth. According to the U.S. Bureau of the Census, in less than eight years Hispanics will become the largest U.S. minority group. The long term efforts are important for Blacks as well: whereas in 1970, the nation's 22 million Blacks accounted for about twice as many people as Hispanics, by 2030 Hispanics will outnumber Blacks by nearly 22 million. The notable growth of the Hispanic population will affect national roles of this ethnic group within the U.S. economy. The extraordinary growth of the Hispanic population in the United States has been uneven among the different Hispanic origin sub-groups: Mexicans, Puerto Ricans, Cubans, and others. Each of these Hispanic groups has its special demographic, economic, and income characteristics. For example, Mexicans account for the largest numbers of people across the country, but a large number of them are newcomers and came to the United States searching for jobs and better living conditions than the ones that they had in Mexico. On the other hand, many Cubans and others from South and Central America came to the U.S. as political refuges, bringing with them high levels of human capital and important sums of financial assets which helped them to become important actors in their economic activities. The overriding purpose of this paper is to analyze the main
causes for income differentials between Hispanics and other ethnic
groups. Here we analyze issues such as the deterioration of Hispanics
income in constant terms between 1980 and 1990 and the poor returns
that Hispanics have on their Labor Force Participation Rates.
We evaluate the prevailing relationships between a variable for
"income differential" with socioeconomic variables
related to the Hispanic population. Finally, using time series
in an econometric analysis, the paper explains the potential
impact of income differentials on the economic development of
the Hispanic community in the United States. Hardcopy Price: $3.00
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