The State of Minority- and Women- Owned ... - Cleveland.com

Market-Based Disparities in Business Formation and Business Owner Earnings
A comparison of Tables 5.1 and 5.2 shows that for Hispanics and Asians, the disparities in the
construction sector are somewhat smaller than those observed in the economy as a whole. For
African Americans and nonminority women, they are somewhat larger. Disparities for Native
Americans are about the same in both tables.
b. Specifications 2 and 3 - the Full Model Including CLEVMA-Specific
Interaction Terms
Next, we turn to Specifications 2 and 3 in Tables 5.1 through 5.3. In each of these Tables,
Specification 2 is the basic regression model with a set of interaction terms added, designed to
test whether minorities and women in the CLEVMA differ significantly from those elsewhere in
the U.S. economy. Specification 2 in Table 5.1, for example, shows a -31.9 percent wage
difference that estimates the direct effect of being African American in 2006–2010, as well as a
statistically significant 4.9 percent wage decrement that captures the indirect effect of residing in
the CLEVMA and being African American. That is, wages for African Americans in the
CLEVMA, on average, were 4.9 percent lower than for African Americans in the nation as a
whole and 36.8 percent lower (-31.9 percent minus 4.9 percent) than for nonminority males in
the CLEVMA.
Specification 3 simply repeats Specification 2, dropping any CLEVMA interactions that are not
statistically significant. In Table 5.1, for example, interaction terms were included in the final
specification for African Americans and persons reporting two or more races. The net result of
Specification 3 in Table 5.1 is evidence of large, adverse, and statistically significant wage
disparities for all minority groups and for nonminority women consistent with the presence of
discrimination in these markets. The same is true for the construction sector (Table 5.2) as well
as for the goods and services sector (Table 5.3).
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