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On The Measurement Of Illegal Wage Discrimination: The Michael Jordan Paradox

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Author Info
Juan Prieto Rodríguez () (Universidad de Oviedo)
Juan Gabriel Rodríguez () (Universidad Rey Juan Carlos)
Rafael Salas () (Universidad Complutense de Madrid)

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Abstract

Standard wage discrimination models assume that independent observers are able to distinguish a priori which workers are suffering from discrimination. However, this assumption may be inadequate when severe penalties can be imposed on discriminatory employers. Antidiscrimination laws will induce firms to behave in such a way that independent observers (for instance, lawyers, economists) cannot easily detect discriminatory practices. This problem can be solved by estimating the discriminatory wage gap using finite mixture or latent class models because these procedures do not require the a priori classification of workers. In fact, the standard discrimination model can be seen as a particular case of our method when the probabilities of belonging to a group are fixed (to one or zero). We estimate discrimination coefficients for Germany and United Kingdom using the European Community Household Panel (ECHP). We obtain unambiguous higher discrimination in Germany for a wide set of measures

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Publisher Info
Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 38.

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Length: 34 pages
Date of creation: 2006
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Handle: RePEc:inq:inqwps:ecineq2006-38

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Related research
Keywords: discrimination; wages; latent class model; finite mixture models.;

Find related papers by JEL classification:
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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References listed on IDEAS
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.:
  1. Jenkins, Stephen P., 1994. "Earnings discrimination measurement : A distributional approach," Journal of Econometrics, Elsevier, vol. 61(1), pages 81-102, March. [Downloadable!] (restricted)
  2. Beard, T Randolph & Caudill, Steven B & Gropper, Daniel M, 1991. "Finite Mixture Estimation of Multiproduct Cost Functions," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 654-64, November. [Downloadable!] (restricted)
  3. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September. [Downloadable!] (restricted)
  4. Newell, Andrew & Reilly, Barry, 2001. "The gender pay gap in the transition from communism: some empirical evidence," Economic Systems, Elsevier, vol. 25(4), pages 287-304, December. [Downloadable!] (restricted)
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  5. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-44, September. [Downloadable!] (restricted)
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  6. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June. [Downloadable!] (restricted)
  7. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465. [Downloadable!]
  8. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 30(2), pages 175-187, January.
  9. James Albrecht & Anders Bjorklund & Susan Vroman, 2003. "Is There a Glass Ceiling in Sweden?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 145-177, January. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Juan Prieto-Rodriguez & Juan Gabriel Rodriguez & Rafael Salas, 2008. "A theoretical model of wage discrimination with inspection fines," Economics Bulletin, Economics Bulletin, vol. 10(3), pages 1-9. [Downloadable!]
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