Performance Pay and the White-Black Wage Gap

John S. Heywood () and Daniel Parent ()

CLSRN Working Papers from UBC Department of Economics

Abstract: We show that the reported tendency for performance pay to be associated with greater wage inequality at the top of the earnings distribution applies only to white workers. This results in the white-black wage differential among those in performance pay jobs growing over the earnings distribution even as the same differential shrinks over the distribution for those not in performance pay jobs. We show this remains true even when examining suitable counterfactuals that hold observables constant between whites and blacks. We explore reasons behind our finding that performance pay is associated with greater racial earnings gaps at the top of the wage distribution focusing on the interactions between discrimination, unmeasured ability and selection.

Keywords: Racial Wage Differentials; Compensation Practices (search for similar items in EconPapers)
JEL-codes: J15 J31 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2009-07-22, Revised 2009-07-22
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Related works:
Journal Article: Performance Pay and the White-Black Wage Gap (2012)
Working Paper: Performance Pay and the White-Black Wage Gap (2009)
Working Paper: PERFORMANCE PAY AND THE WHITE-BLACK WAGE GAP (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:ubc:clssrn:clsrn_admin-2009-42

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