Labor Market Information and Wage Differentials by Race and Sex
This paper attempts to test whether information problems in labor markets can explain why minority or female workers are sometimes paid less than equally-qualified white male workers. In particular, the relationship between starting wages, current performance, and race and sex is studied. OLS regressions of starting wages on current performance--which is measured some time after the beginning of employment--indicate that minority workers are paid lower starting wages than white workers with the same eventual performance, among both men and women. This may reflect taste discrimination. However, if employers base starting wages on expected productivity or performance, and average performance is lower for minority workers (as it is in these data), then these estimated differentials could reflect simple statistical discrimination. A test of statistical versus taste discrimination and a test of statistical discrimination versus pure measurement error provide some evidence for both men and women that statistical discrimination is partly to blame for these differences in starting wages between minority and white workers, although the evidence is not very strong statistically. Average performance of women is if anything higher than that of men, so simple statistical discrimination cannot explain the lower starting wages that women receive. However, more complex models of statistical discrimination suggest that worse labor market information about a particular group can generate lower wages for that group. A test of the quality of labor market information suggests that employers have better information about male workers, which may explain the lower starting wages paid to women. Together, this evidence suggests that better labor market information might boost starting wages of minorities and women.
|Date of creation:||May 1998|
|Date of revision:|
|Publication status:||Published as "Wage Differentials by Race and Sex: The Roles of Taste Discrimination and Labor Market Information", Industrial Relations, Vol. 38 , no. 3 (July 1999): 414-445.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
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.:
- Rothschild, Michael & Stiglitz, Joseph E., 1982. "A model of employment outcomes illustrating the effect of the structure of information on the level and distribution of income," Economics Letters, Elsevier, vol. 10(3-4), pages 231-236.
- Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
- Barron, John M & Black, Dan A & Loewenstein, Mark A, 1989. "Job Matching and On-the-Job Training," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 1-19, January.
- Neumark, David, 1996.
"Sex Discrimination in Restaurant Hiring: An Audit Study,"
The Quarterly Journal of Economics,
MIT Press, vol. 111(3), pages 915-41, August.
- David Neumark & Roy J. Bank & Kyle D. Van Nort, 1995. "Sex Discrimination in Restaurant Hiring: An Audit Study," NBER Working Papers 5024, National Bureau of Economic Research, Inc.
- Bergmann, Barbara R, 1989. "Does the Market for Women's Labor Need Fixing?," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 43-60, Winter.
- Daniel Immergluck, 1996. "What employers want: Job prospects for less-educated workers," The Review of Black Political Economy, Springer, vol. 24(4), pages 135-143, June.
- Joseph G. Altonji & Charles R. Pierret, 1997.
"Employer learning and statistical discrimination,"
Working Paper Series, Macroeconomic Issues
WP-97-11, Federal Reserve Bank of Chicago.
- Joseph G. Altonji & Charles R. Pierret, . "Employer Learning and Statistical Discrimination," IPR working papers 97-18, Institute for Policy Resarch at Northwestern University.
- Joseph G. Altonji & Charles R. Pierret, 1997. "Employer Learning and Statistical Discrimination," NBER Working Papers 6279, National Bureau of Economic Research, Inc.
- Light, Audrey & Ureta, Manuelita, 1995. "Early-Career Work Experience and Gender Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 121-54, January.
- Farmer, Amy & Terrell, Dek, 1996. "Discrimination, Bayesian Updating of Employer Beliefs and Human Capital Accumulation," Economic Inquiry, Western Economic Association International, vol. 34(2), pages 204-19, April.
- Oaxaca, Ronald, 1973.
"Male-Female Wage Differentials in Urban Labor Markets,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
- Ronald Oaxaca, 1971. "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
- H. Holzer & D. Neumark, .
"Are affirmative action hires less qualified? Evidence from employer-employee data on new hires,"
Institute for Research on Poverty Discussion Papers
1113-96, University of Wisconsin Institute for Research on Poverty.
- Holzer, Harry & Neumark, David, 1999. "Are Affirmative Action Hires Less Qualified? Evidence from Employer-Employee Data on New Hires," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 534-69, July.
- Harry Holzer & David Neumark, 1996. "Are Affirmative Action Hires Less Qualified? Evidence from Employer-Employee Data on New Hires," NBER Working Papers 5603, National Bureau of Economic Research, Inc.
- Richard W. Johnson & David Neumark, 1997.
"Age Discrimination, Job Separations, and Employment Status of Older Workers: Evidence from Self-Reports,"
Journal of Human Resources,
University of Wisconsin Press, vol. 32(4), pages 779-811.
- Richard W. Johnson & David Neumark, 1996. "Age Discrimination, Job Separation, and Employment Status of Older Workers: Evidence from Self-Reports," NBER Working Papers 5619, National Bureau of Economic Research, Inc.
- Oettinger, Gerald S, 1996. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 52-78, January.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
- Andrew D. Foster & Mark R. Rosenzweig, 1993. "Information, Learning, and Wage Rates in Low-Income Rural Areas," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 759-790.
- Lang, Kevin, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 363-82, May.
- Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
- Derek A. Neal & William R. Johnson, 1995.
"The Role of Pre-Market Factors in Black-White Wage Differences,"
NBER Working Papers
5124, National Bureau of Economic Research, Inc.
- Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-95, October.
- Smith, James P & Ward, Michael, 1989. "Women in the Labor Market and in the Family," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 9-23, Winter.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6573. 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: ()
If references are entirely missing, you can add them using this form.