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Performance Pay and Ethnic Wage Differences in Britain

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Author Info

  • Colin P. Green
  • John S. Heywood
  • Nikolaos Theodoropoulos

Abstract

In the first study using British data, we show that the average wage advantage of holding a performance pay job is greater for minorities than that for Whites. This generates a smaller ethnic wage gap among performance pay jobs than among time rate jobs. Yet, this pattern is driven by those receiving bonuses not those receiving performance related pay and it is evident only for Asians and for those in managerial jobs. Moreover, it is partially driven by sorting in which the more able take bonus jobs. Nonetheless, the basic results persist with diminished magnitude in fixed effect estimates. These findings differ dramatically from those for United States in which bonuses appear to increase racial differentials especially at the top of the earnings distribution.

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/06-12.pdf
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Bibliographic Info

Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 06-2012.

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Length: 40 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:ucy:cypeua:06-2012

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Web page: http://www.econ.ucy.ac.cy

Related research

Keywords: Performance Pay; Ethnic Earnings Differentials;

This paper has been announced in the following NEP Reports:

References

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  1. Christian Dustmann & Tommaso Frattini & Nikolaos Theodoropoulos, 2010. "Ethnicity and Second Generation Immigrants in Britain," CReAM Discussion Paper Series 1004, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  2. Christian Dustmann & Nikolaos Theodoropoulos, 2006. "Ethnic Minority Immigrants and their Children in Britain," CReAM Discussion Paper Series 0610, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  3. Kenneth Clark & Stephen Drinkwater, 2006. "Dynamics and Diversity: Ethnic Employment Differences in England and Wales, 1991 - 2001," School of Economics Discussion Papers, School of Economics, University of Surrey 1206, School of Economics, University of Surrey.
  4. Tony Fang & John S. Heywood, 2010. "Immigration, Ethnic Wage Differentials and Output Pay in Canada," British Journal of Industrial Relations, London School of Economics, vol. 48(1), pages 109-130, 03.
  5. Daniel Parent & John S. Heywood, 2009. "Performance Pay And The White-Black Wage Gap," Departmental Working Papers, McGill University, Department of Economics 2009-07, McGill University, Department of Economics.
  6. Nicholas Bloom & John Van Reenen, 2010. "Human Resource Management and Productivity," CEP Discussion Papers dp0982, Centre for Economic Performance, LSE.
  7. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, March.
  8. Pierre-Guillaume Méon & Ariane Szafarz, 2011. "The Modern Corporation as a Safe Haven for Taste-Based Discrimination: An Agency Model of Hiring Decisions," ULB Institutional Repository 2013/88635, ULB -- Universite Libre de Bruxelles.
  9. Kevin Lang, 2007. "Introduction to Poverty and Discrimination
    [Poverty and Discrimination]
    ," Introductory Chapters, Princeton University Press.
  10. Colin Green & John Heywood, 2012. "Don't Forget the Gravy! Are Bonuses and Time Rates Complements?," Working Papers 13424023, Lancaster University Management School, Economics Department.
  11. John S. Heywood & Patrick L. O’Halloran, 2005. "Racial Earnings Differentials and Performance Pay," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. A benefit of performance pay
    by chris dillow in Stumbling and Mumbling on 2012-05-29 13:43:17

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