The measurement of pay discrimination between job assignments
The traditional Becker/Arrow model of taste discrimination in pay depicts majority and minority labour as perfectly substitutable, implying that all workers perform precisely the same job assignment and have the same qualifications. The model is thus only appropriate for determining whether ceteris paribus pay differences between white workers and non-white workers, for example, performing job assignment A are attributable to prejudice ('within-assignment discrimination'). The model is inappropriate for determining whether ceteris paribus pay differences between white workers in assignment A and non-white workers in assignment B reflect prejudice ('cross-assignment discrimination'). We extend the traditional model to allow for cross-assignment discrimination and we propose an empirical methodology for its estimation. In so doing we address two broad questions: (1) Do predictions about cross-assignment discrimination vary with the form of the production function?; and (2) How can one estimate such discrimination when there is no common measure of productivity? We address the first question by deriving a measure of cross-assignment discrimination for four different production functions--Generalized Leontief, Quadratic, CES, and Cobb-Douglas. The Generalized Leontief provides the most general results, although closed form solutions are not possible. Closed form solutions are obtainable from the other three functions, but only under restrictive assumptions. There are two main findings. First, most predictions are generally robust across functional forms. Second, cross-assignment discrimination depends upon productivity and labour supply differences between the two worker groups, labour market structure, and the interaction between relative group productivity and prejudice. We address the second question by outlining, for future exploration, a two-stage regression methodology in which a standardised (i.e. common) measure of productivity is estimated separately for each occupation. This measure is then incorporated as a right-hand-side explanatory variable in a second-stage, all-occupation regression designed to estimate cross-assignment discrimination. We discuss the proposed methodology with reference to a valuable and interesting test case: The market for professional sports players.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Arabsheibani, G. Reza & Alan Marin & Jonathan Wadsworth, 2002.
"Gays' Pay in the UK,"
Royal Economic Society Annual Conference 2002
8, Royal Economic Society.
- Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
- Borjas, George J, 1986.
"The Sensitivity of Labor Demand Functions to Choice of Dependent Variable,"
The Review of Economics and Statistics,
MIT Press, vol. 68(1), pages 58-66, February.
- George J. Borjas, 1985. "The Sensitivity of Labor Demand Functions to Choice of Dependent Variable," NBER Working Papers 1624, National Bureau of Economic Research, Inc.
- Bodvarsson, Örn B. & Sessions, John G., 2008. "The Measurement of Racial Discrimination in Pay between Job Categories: Theory and Test," IZA Discussion Papers 3748, Institute for the Study of Labor (IZA).
- Altonji, Joseph G. & Blank, Rebecca M., 1999.
"Race and gender in the labor market,"
Handbook of Labor Economics,
in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259
- repec:eid:wpaper:08/10 is not listed on IDEAS
- Finis Welch, 1967. "Labor-Market Discrimination: An Interpretation of Income Differences in the Rural South," Journal of Political Economy, University of Chicago Press, vol. 75, pages 225.
- Gauger, Jean, 1989. "The generated regressor correction: Impacts upon inferences in hypothesis testing," Journal of Macroeconomics, Elsevier, vol. 11(3), pages 383-395.
- Sylvia A. Allegretto & Michelle M. Arthur, 2001. "An Empirical analysis of homosexual/heterosexual male earnings differentials: Unmarried and unequal?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(3), pages 631-646, April.
- Epstein, Gil S. & Gang, Ira N., 2010.
"Migration and Culture,"
IZA Discussion Papers
5123, Institute for the Study of Labor (IZA).
- Gil Epstein & Ira Gang, 2010. "Migration and Culture," CReAM Discussion Paper Series 1020, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Gil S. Epstein & Ira N. Gang, 2010. "Migration and Culture," Working Papers 2010-17, Bar-Ilan University, Department of Economics.
- Gil S. Epstein & Ira N. Gang, 2010. "Migration and Culture," Development Working Papers 304, Centro Studi Luca d\'Agliano, University of Milano.
- James H. Grant & Daniel S. Hamermesh, 1980.
"Labor Market Competition among Youths, White Women, and Others,"
NBER Working Papers
0519, National Bureau of Economic Research, Inc.
- Grant, James H & Hamermesh, Daniel S, 1981. "Labor Market Competition among Youths, White Women and Others," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 354-60, August.
- Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
- Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
- Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February.
- Bodvarsson, Orn & Sessions, John, 2010. "Nationality Discrimination in the Labor Market:Theory and Test," Department of Economics Working Papers 19997, University of Bath, Department of Economics.
- Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
- Gawande, Kishore, 1997. "Generated regressors in linear and nonlinear models," Economics Letters, Elsevier, vol. 54(2), pages 119-126, February.
- Kahn, Lawrence M, 1991. "Customer Discrimination and Affirmative Action," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 555-71, July.
- Hashimoto, Masanori & Kochin, Levis, 1980. "A Bias in the Statistical Estimation of the Effects of Discrimination," Economic Inquiry, Western Economic Association International, vol. 18(3), pages 478-86, July.
When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:18:y:2011:i:3:p:297-309. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.