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Slicing and dicing the gender/racial earnings differentials

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  • Margaret Yap
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    Abstract

    Purpose – This paper aims to explore an extensive set of determinants of earnings and to offer recent empirical evidence of their effects on gender and racial earnings gaps. Design/methodology/approach – Most previous studies looked at gender and racial comparisons independently of each other. This study extends previous studies by considering the interaction between gender and race. Using administrative data from a large Canadian firm, this paper explores the determinants of earnings based on a standard human capital model, comparing the earnings of white females, minority males and minority females with their white male counterparts. Both the dummy variable approach and a decomposition analysis are employed. Findings – The results show that ranking in the organizational hierarchy accounts for most of the differences in gender and racial earnings, and ranking, together with human capital and job characteristics variables, explains over 90 percent of the earnings gap. Research limitations/implications – The analyses in the paper are based on data from a Canadian organization with nation-wide operations. The findings may not apply to small or medium sized enterprises in Canada and in other non-Western economies. Practical implications – To eliminate the earnings gap, equal pay programs need to be supplemented by effective employers' programs and policies targeted at equal advancement opportunity. Originality/value – The paper uses firm-level data, which provides natural controls for variations across firms and allows for more in-depth analysis of the impact of various factors on earnings differentials.

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    File URL: http://www.emeraldinsight.com/journals.htm?issn=0143-7720&volume=31&issue=4&articleid=1875416&show=abstract
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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

    Volume (Year): 31 (2010)
    Issue (Month): 4 ( July)
    Pages: 466-488

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    Handle: RePEc:eme:ijmpps:v:31:y:2010:i:4:p:466-488

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    Web page: http://www.emeraldinsight.com

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    Related research

    Keywords: Canada; Gender; Pay; Pay differentials;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
    2. Cobb-Clark, Deborah A., 2001. "Getting Ahead: The Determinants of and Payoffs to Internal Promotion for Young U.S. Men and Women," IZA Discussion Papers 288, Institute for the Study of Labor (IZA).
    3. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
    4. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
    5. Marie Drolet, 2002. "Can the Workplace Explain Canadian Gender Pay Differentials?," Canadian Public Policy, University of Toronto Press, vol. 28(s1), pages 41-63, May.
    6. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
    7. Derek Hum & Wayne Simpson, 1999. "Wage Opportunities for Visible Minorities in Canada," Canadian Public Policy, University of Toronto Press, vol. 25(3), pages 379-394, September.
    8. Drolet, Marie, 2001. "The Persistent Gap: New Evidence on the Canadian Gender Wage Gap," Analytical Studies Branch Research Paper Series 2001157e, Statistics Canada, Analytical Studies Branch.
    9. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
    10. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    11. Marie Drolet, 2002. "Can the workplace explain Canadian gender pay differentials?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 36(1), pages 75-77.
    12. Michael P. Kidd & Michael Shannon, 1994. "An Update and Extension of the Canadian Evidence on Gender Wage Differentials," Canadian Journal of Economics, Canadian Economics Association, vol. 27(4), pages 918-38, November.
    13. William E. Schrank, 1977. "Sex Discrimination in Faculty Salaries: A Case Study," Canadian Journal of Economics, Canadian Economics Association, vol. 10(3), pages 411-33, August.
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