Incentive Schemes and Racial Wage Discrimination

Author:

Belman Dale,Heywood John S.

Abstract

We use a major micro data set to investigate the influence of incentive schemes on wage discrimination against blacks. Incentive schemes which directly link earnings and productivity appear to generally raise earnings, but they increase wages of blacks proportionately more than those of whites. This reduces the residual attributable to discrimination and suggests it is easier to discriminate when earnings are based on perceptions of input (evaluations of effort) rather than on measures of output.

Publisher

SAGE Publications

Subject

Economics and Econometrics,Cultural Studies

Reference10 articles.

1. John Pencavel, “Work Effort, on-the-Job Screening, and Alternative Methods of Remuneration,”Research in Labor Economics (1977), pp. 225-258.

2. On the former, see Orley Ashenfelter, “Union Wage Effects: New Evidence and a Survey of Their Implications for Wage Inflation,” inEconometric Contributions to Public Policy, edited by R. Stone and W. Peterson (New York: St. Martin’s, 1979). On the latter, see John S. Heywood, “Wage Discrimination and Market Structure,”Journal of Post Keynesian Economics (Summer 1987), pp. 617–628.

3. Norma W. Carlson, “Time Rates Tighten their Grip on Manufacturing Industries,”Monthly Labor Review (May 1982), pp. 15–22.

4. See Claudia Goldin, “Monitoring Costs and Occupational Segregation by Sex: A Historical Analysis,”Journal of Labor Economics (January 1986), pp. 1–27.

5. We have argued elsewhere that the correlation between incentive use and “femaleness” is not conclusive evidence that gender segregation results from efficient allocation among incentive schemes. See Dale Belman and John S. Heywood, “Wages and Incentive Schemes: Testing Rival Hypotheses, ”Working Paper, Department of Economics, University of Wisconsin—Milwaukee, June 1987.

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