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Racial Differences In Availability Of Fringe Benefits As An Explanation For The Unexplained Blackwhite Wage Gap For Males In Us

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  • Kristjan-Olari Leping

Abstract

The US black-white wage gap is an issue that has attracted thorough investigation, but so far the corresponding gap for fringe benefits has not received sufficient attention. Although ethnic differences in fringe benefits could affect wage differences, previous analysis of ethnic wage gaps in the vast majority of cases has not taken fringe benefits into account. In order to fill that gap in the existing literature, this article estimates the black-white gap for both wages and fringe benefits on the basis of US data. Data from the 2004 section of the National Longitudinal Survey of Youth 1979 has been used in this analysis. Our results indicate that when controlling for various individual and job characteristics, there remains a wage gap in favour of whites, and for several fringe benefits, there is an unexplained gap in favour of blacks. This result means that the ethnic wage gap overestimates the ethnic compensation gap. We also argue that fringe benefits are used to compensate blacks for their lower wages.

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Paper provided by Faculty of Economics and Business Administration, University of Tartu (Estonia) in its series University of Tartu - Faculty of Economics and Business Administration Working Paper Series with number 57.

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Length: 39 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mtk:febawb:57

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Keywords: ethnicity; wages; fringe benefits;

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  1. David Card & Alan B. Krueger, 1991. "School Quality and Black-White Relative Earnings: A Direct Assessment," NBER Working Papers 3713, National Bureau of Economic Research, Inc.
  2. David Collard & Michael Godwin & John Hudson, 2005. "The Provision of Company Benefits in the UK," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(7-8), pages 1397-1421.
  3. Dan Black & Amelia Haviland & Seth Sanders & Lowell Taylor, 2006. "Why Do Minority Men Earn Less? A Study of Wage Differentials among the Highly Educated," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 300-313, May.
  4. Richard B. Freeman, 1981. "The effect of unionism on fringe benefits," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(4), pages 489-509, July.
  5. John W. Budd, 2004. "Non-Wage Forms of Compensation," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 597-622, October.
  6. William Rodgers & William Spriggs, 1996. "What does the AFQT really measure: Race, wages, schooling and the AFQT score," The Review of Black Political Economy, Springer, vol. 24(4), pages 13-46, June.
  7. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
  8. Oettinger, Gerald S, 1996. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 52-78, January.
  9. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, March.
  10. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1493-1525, November.
  11. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-48, December.
  12. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  13. Jayachandran N. Variyam & David S. Kraybill, 1998. "Fringe Benefits Provision by Rural Small Businesses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(2), pages 360-368.
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