ates. Although these results are a simplified representation of averages, they suggest that the

overall returns to secondary education are small in Peru, but that the wage and employment returns

to only completing secondary education for indigenous individuals is considerably lower. 30

[Figure 4 Goes Here]

8. Conclusion

We demonstrate that education can be a powerful tool to empower discriminated groups to

resist labor-market discrimination, but not at every level. Increases in levels of education lead to

non-linear increases in the likelihood of formal employment. At the primary and tertiary level,

indigenous and non-indigenous face similar chances of finding formal employment. At the

secondary level, in contrast, the returns to education are lower for non-indigenous workers. This

finding is robust to numerous specifications.

We also find that this informality trap across indigenous groups with only secondary

education cannot be fully explained by historical discrimination, migration, or industry-specific

variables. Instead, we find that past differences in the quality of education matters the most:

secondary education for indigenous groups appears to be of lower quality than for non-indigenous

groups. The overall consequence is a possible development trap for indigenous workers, even those

who have succeeded at attaining secondary education.

Latin America has made huge inroads in universalizing education at the secondary level.

But it now faces the challenge of universalizing the quality of education at the secondary level.


Note that the interaction term for indigenous and secondary education approaches significance

but is measured with sufficient error as to render the coefficient insignificant at the 10% level.


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