Latino workers in Texas are on the short end of two pay gaps. They earn substantially lower wages than the state's non-Hispanic white workers. They also earn less than Latinos working in other parts of the U.S. ; In the fourth quarter 2009 issue of Southwest Economy, we identified lower educational attainment and such characteristics as immigrant status and country of origin as key factors in explaining Texas Latinos' relatively low wages. We now want to dig deeper into the Latino pay gaps. Two key questions remain unexplored. First, can we quantify the educational and demographic factors' relative contributions to the Latino wage gaps? Second, what role does occupational choice play in Texas Latinos' lower earnings? ; We find that education explains more than half of the Latino pay gap vis-a-vis non-Hispanic whites in the state and 20 percent of the gap vis-a-vis Latinos outside Texas. English fluency and state-level characteristics--such as cost of living, geography, history and institutions--likely account for much of the remaining wage deficit of Latinos in Texas. We also find that occupational choice explains some of the wage gap within Texas but little to none of the disparities across states.
