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Title:Testing for Employee Discrimination Using Matched Employer-Employee Data: Theory and Evidence PDF Logo
Authors:Frijters, Paul
Shields, Michael A.
Theodoropoulos, Nikolaos
Price, Stephen Wheatley
Issue Date:2003
Series/Report no.:IZA Discussion paper series 807
Abstract:In this paper, we directly test Becker?s theory of employee discrimination using matched worker-workplace data from Britain. Based on a structural model with individual and firm heterogeneity, we develop and test two predictions. Firstly, if white employees have a taste for discrimination they should report lower levels of job satisfaction the larger the proportion of ethnic minorities at their workplace. Secondly, white employees? wages should also increase with the concentration of ethnic minority co-workers. Both hypotheses are strongly supported for white males in our data, after controlling for human capital and job amenity variables, though not for females. The white male wage premium for working amongst only ethnic minority co-workers, as compared to working only with whites, is about 12%. Neither of these effects operate via realised racial prejudice at the workplace or employees? feelings concerning job security.
Subjects:employee discrimination
compensating differentials
structural estimation
wages
job satisfaction
JEL:J3
J7
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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