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Performance pay and ethnic earnings differences in Britain

Author

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

Abstract

In the first British study, we show that the ethnic earnings gap amongst performance pay jobs is smaller than that amongst time rate jobs. This partially reflects sorting but persists with diminished magnitude in fixed effect estimates. Although varying somewhat with specification, quantile decompositions show that the smaller ethnic earnings gap is driven by bonus payments in the upper middle portion of the earnings distribution. These findings differ dramatically from those for the USA in which performance pay has been associated with larger negative racial differentials especially at the top of the earnings distribution.

Suggested Citation

  • Colin P. Green & John S. Heywood & Nikolaos Theodoropoulos, 2014. "Performance pay and ethnic earnings differences in Britain," Oxford Economic Papers, Oxford University Press, vol. 66(3), pages 798-823.
    • Handle: RePEc:oup:oxecpp:v:66:y:2014:i:3:p:798-823.
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    File URL: http://hdl.handle.net/10.1093/oep/gpt035
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    Citations

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    Cited by:

    1. Benjamin Artz & Colin P. Green & John S. Heywood, 2021. "Does performance pay increase alcohol and drug use?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 969-1002, July.
    2. Simonetta Longhi, 2020. "Racial wage differentials in developed countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 365-365, October.
    3. Janice Fanning Madden & Alexander Vekker, 2017. "Output-Based Performance Pay, Performance-Support Bias, and the Racial Pay Gap within a Large Retail Stock Brokerage," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 662-687, October.
    4. Melanie Jones & Ezgi Kaya, 2024. "Performance‐related pay and the UK gender pay gap," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 63(4), pages 512-529, October.
    5. Jones, Melanie, 2024. "The disability pay gap in the UK: What is the role of the public sector?," Labour Economics, Elsevier, vol. 91(C).
    6. Geraldine Healy & M. Mostak Ahamed, 2019. "Gender Pay Gap, Voluntary Interventions and Recession: The Case of the British Financial Services Sector," British Journal of Industrial Relations, London School of Economics, vol. 57(2), pages 302-327, June.
    7. Douglas Amuli Ibale, 2020. "Earning structure and heterogeneity of the labor market: Evidence from DR Congo," LIDAM Discussion Papers IRES 2020037, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Forth, John & Jones, Melanie K., 2025. "The Disability Pay Gap Within and Across Firms," IZA Discussion Papers 17679, Institute of Labor Economics (IZA).

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