Testing for Employee Discrimination Using Matched Employer-Employee Data: Theory and Evidence

Paul Frijters, Michael Shields, Nikolaos Theodoropoulos and Stephen Wheatley Price

No 807, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: employee discrimination; compensating differentials; structural estimation; wages; job satisfaction (search for similar items in EconPapers)
JEL-codes: J3 J7 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2003-06
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://docs.iza.org/dp807.pdf (application/pdf)

Related works:
Working Paper: TESTING FOR EMPLOYEE DISCRIMINATION USING MATCHED EMPLOYER-EMPLOYEE DATA: THEORY AND EVIDENCE (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp807

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().