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Testing for Employee Discrimination using Matched Employer-Employee Data: Theory and Evidence

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  • Paul Frijters
  • Michael A Shileds

    (University of Melbourne)

  • Nikolaos Theodoropoulos

    (University of Leicester, UK)

  • Stephen Wheatley

    (University of Leicester, UK)

Abstract

We use recent matched employer-employee data to directly investigate if white workers have a taste for racial discrimination in Britain. Based on a new structural model with individual and firm heterogeneity, we develop and test two predictions. Firstly, white employees with a taste for discrimination should report lower levels of job satisfaction the larger the proportion of ethnic minorities at their workplace. Secondly, white employees would have to be compensated by higher wages if required to work alongside ethnic minority co-workers. Both hypotheses are clearly supported for white males in our data, after comprehensively controlling for individual, job, and workplace characteristics. However, the evidence is weaker for females. The white male wage premium for working amongst only ethnic minority co-workers, as compared to working only with whites, is about 12%. Importantly, it appears that neither of these effects operates via realised racial prejudice at the workplace or white employees' feelings concerning their job security.

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Bibliographic Info

Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 168b.

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Length: 45 pages
Date of creation: 19 Nov 2003
Date of revision:
Handle: RePEc:qut:dpaper:168b

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Postal: GPO Box 2434, BRISBANE QLD 4001
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Web page: http://www.bus.qut.edu.au/faculty/economics/
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Keywords: Employee Discrimination; Compensating Differentials; Structural Estimation; Wages; Job Satisfaction;

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Cited by:
  1. Paul Frijters & Michael A. Shields & Stephen Wheatley Price, 2004. "To Teach Or Not To Teach? Panel Data Evidence On The Quitting Decision," Paul Frijters Discussion Papers 2004-5, School of Economics and Finance, Queensland University of Technology.
  2. Bruno S. Frey & Alois Stutzer, . "Happiness Research: State and Prospects," IEW - Working Papers 190, Institute for Empirical Research in Economics - University of Zurich.
  3. Kodama, Naomi & Odaki, Kazuhiko, 2013. "Employee Discrimination against Female Executives," CIS Discussion paper series 611, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.

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