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Natural Groups and Economic Characteristics as Driving Forces of Wage Discrimination

Listed author(s):
  • Thorsten Chmura

    ()

    (Nottingham University, Business School)

  • Sebastian J. Goerg

    ()

    (Department of Economics, Florida State University)

  • Pia Weiss

    ()

    (Nottingham University, Business School)

We investigate whether the origin of an employee provides different motives for wage discrimination in gift-exchange experiments with students and migrant workers in China. In a lab and an internet experiment, subjects in the role of employers can condition their wages on the employees? home provinces. The resulting systematic differences in wages can be linked to natural groups and economic characteristics of the provinces. In-group favoritism increases wages for employees who share the same origin as the employer, while an increased probability of being matched with an employee with a different ethnicity reduces wages. Furthermore, wages in the laboratory increase with the actual wage level in the employees? home province. Nevertheless, employees? effort is not influenced by these variables; only the wage paid in the experiment influences effort.

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File URL: ftp://econpapers.fsu.edu/RePEc/fsu/wpaper/wp2016_04_01.pdf
File Function: First version, 2016-04
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File URL: ftp://econpapers.fsu.edu/RePEc/fsu/wpaper/wp2016_04_01.pdf
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Paper provided by Department of Economics, Florida State University in its series Working Papers with number wp2016_04_01.

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Length: 62
Date of creation: Apr 2016
Handle: RePEc:fsu:wpaper:wp2016_04_01
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