Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333645 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18206
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We examine the contribution to ethnic earnings gaps of differences in the firms where different ethnic groups work. We use linked employer-employee data to estimate worker and firm pay premiums (fixed effects), adapting existing methods to deal with multiple-response ethnicities and weighting. The sorting of workers across firms contributes 10-26 percent of within-ethnicity gender gaps but affects average earnings for men or women within ethnic groups by less than 1 percent, in the face of average ethnic earnings gaps of up to 14 percent. We conclude that within-firm earnings differences are the dominant source of ethnic earnings gaps.
Subjects: 
earnings
ethnicity
sorting
two-way fixed effects
linked employer employee data
JEL: 
J15
J30
J42
J71
Document Type: 
Working Paper

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