employers discriminate against indigenous workers at all levels, this hypothesis cannot explain the

paper’s main finding that returns to education are specific to indigenous groups with only

secondary education.

[Table VII]

There is also the potential for sectoral preference based on self-selection. Fields (1990,

2004) and Maloney (2004) argue that many individuals opt for informal self-employment

willingly. If indigenous individuals display a preference for informal self-employment over

salaried work, and it is most pronounced at secondary education, this preference could explain the

estimated differences in returns to education. 24 However, we don’t find support for this selfselection

hypothesis in Table VIII.

[Table VIII]

secondary education is consistently positive, but only statistically significant for ‘elementary’

occupations. Some of these occupations include street vendors, cleaners, food preparation

workers and agricultural labourers. This suggests that educated non-indigenous individuals

obtain the few elementary occupations that require secondary education and offer pensions. See

Online Appendix Section A2.


Adams and Valdivia (1994, 10-11) argue that Andean Peruvians primarily belonging to

Quechua and Aymara indigenous groups - often establish cultural autonomy by means of

pursuing informal self-employment.


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