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

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  • Paul Frijters

    (School of Economics and Finance, Queensland University of Technology)

Abstract

In this paper, we directly test Becker’s theory of employee discrimination using matched worker-workplace data from Britain. Based on a structural model with individual and firm heterogeneity, we develop and test two predictions. Firstly, if white employees have a taste for discrimination they should report lower levels of job satisfaction the larger the proportion of ethnic minorities at their workplace. Secondly, white employees’ wages should also increase with the concentration of ethnic minority co-workers. Both hypotheses are strongly supported for white males in our data, after controlling for human capital and job amenity variables, though not 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%. Neither of these effects operate via realised racial prejudice at the workplace or employees’ feelings concerning job security.

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Bibliographic Info

Paper provided by School of Economics and Finance, Queensland University of Technology in its series Paul Frijters Discussion Papers with number 2003-1.

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Date of creation: 15 Jun 2003
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Handle: RePEc:qut:pfrijt:2003-1

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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 Frey & Alois Stutzer, 2005. "Happiness Research: State and Prospects," Review of Social Economy, Taylor & Francis Journals, vol. 63(2), pages 207-228.
  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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