Natural groups and economic characteristics as driving forces of wage discrimination

Chmura, Thorsten; Goerg, Sebastian J.; Weiss, Pia

Abstract

© 2016 Elsevier B.V. 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.

Citation

Chmura, T., Goerg, S. J., & Weiss, P. (2016). Natural groups and economic characteristics as driving forces of wage discrimination. European Economic Review, 90, 178-200. https://doi.org/10.1016/j.euroecorev.2016.04.005

• Journal Article Type: Article
• Acceptance Date: Apr 6, 2016
• Online Publication Date: Apr 27, 2016
• Publication Date: Nov 1, 2016
• Deposit Date: Sep 19, 2016
• Publicly Available Date: Apr 28, 2018
• Journal: European Economic Review
• Print ISSN: 0014-2921
• Electronic ISSN: 1873-572X
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 90
• Pages: 178-200
• DOI: https://doi.org/10.1016/j.euroecorev.2016.04.005
• Keywords: Wages; Discrimination; Social identity; Natural groups; Lab experiment; Gift-exchange; Migrant-workers; China
• Public URL: https://nottingham-repository.worktribe.com/output/783437
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S0014292116300708
• Additional Information: This article is maintained by: Elsevier; Article Title: Natural groups and economic characteristics as driving forces of wage discrimination; Journal Title: European Economic Review; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.euroecorev.2016.04.005; Content Type: article; Copyright: © 2016 Elsevier B.V. All rights reserved.