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Selection wages and discrimination

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  • Schlicht, Ekkehart

Abstract

Applicants for any given job are more or less suited to fill it, and the firm will select the best among them. Increasing the wage offer attracts more applicants and makes it possible to raise the hiring standard, thereby improving the productivity of the staff. Wages that optimize on the trade-off between the wage level and the productivity of the workforce are known as selection wages. As men react more strongly to wage differentials than females, the trade-off is more pronounced for men and a profit-maximizing firm will offer a higher wage for men than for women in equilibrium. The argument is not confined to issues of sex discrimination; rather it is of relevance for all labor markets where labor heterogeneity is important and supply elasticities vary systematically across occupations. --

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File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2010-6
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File URL: http://econstor.eu/bitstream/10419/30025/1/618934650.pdf
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Bibliographic Info

Article provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.

Volume (Year): 4 (2010)
Issue (Month): 6 ()
Pages: 1-30

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Handle: RePEc:zbw:ifweej:20106

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Keywords: Discrimination; sex discrimination; occupational discrimination; regional discrimination; selection wages; efficiency wages; hiring standards; monopsony; employment criteria; wage posting; Reder competition; wage structure; inter-industry wage structure; employer size-wage effect; occupational wage structure;

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  1. Alberto F. Alesina & Edward L. Glaeser & Bruce Sacerdote, 2006. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Chapters, in: NBER Macroeconomics Annual 2005, Volume 20, pages 1-100 National Bureau of Economic Research, Inc.
  2. Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-71, September.
  3. Edward L. Glaeser & Bruce I. Sacerdote & Jose A. Scheinkman, 2003. "The Social Multiplier," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 345-353, 04/05.
  4. Paul J . Devereux, 2002. "Occupational Upgrading and the Business Cycle," LABOUR, CEIS, vol. 16(3), pages 423-452, 09.
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