Where does ethnic discrimination occur most intensely? the role of city size and location in labour discrimination: the Ecuadorian case

Abstract Labour discrimination has received extensive attention in the literature, exploring how different dimensions affect discriminatory behaviours. However, few analyses have examined how this process is influenced by location. This paper focuses on contrasting how discriminatory behaviours may be influenced by the urban/rural environment—large central cities versus rural areas or small peripheral cities. The analysis is applied to Ecuador, which features one of the most accentuated ethnic complexities in Latin America but also encompasses large urban agglomerations, central, peripheral medium-sized cities, and rural environments distributed throughout a wide and complex geography. Additionally, Ecuador possesses a database—ENEMDU—identifying individuals’ ethnicity and location with a detailed spatial disaggregation. With this information, a standard wage equation is estimated by applying Heckman correction for non-randomly selected samples, and Gelbach's test is applied to the Oaxaca‒Blinder ethnicity decomposition, incorporating heterogeneous spatial effects. Our results confirm that wage ethnic discrimination worsens as some groups concentrate in peripheral areas—small–medium-sized cities or rural areas. In addition, their location penalty is higher than the estimated difference for other groups.