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On The Measurement Of Illegal Wage Discrimination: The Michael Jordan Paradox

Juan Prieto Rodríguez (), Juan Prieto-Rodriguez () and Rafael Salas ()
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Juan Prieto Rodríguez: Universidad de Oviedo

Authors registered in the RePEc Author Service: Juan Gabriel Rodríguez ()

No 38, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: Standard wage discrimination models assume that independent observers are able to distinguish a priori which workers are suffering from discrimination. However, this assumption may be inadequate when severe penalties can be imposed on discriminatory employers. Antidiscrimination laws will induce firms to behave in such a way that independent observers (for instance, lawyers, economists) cannot easily detect discriminatory practices. This problem can be solved by estimating the discriminatory wage gap using finite mixture or latent class models because these procedures do not require the a priori classification of workers. In fact, the standard discrimination model can be seen as a particular case of our method when the probabilities of belonging to a group are fixed (to one or zero). We estimate discrimination coefficients for Germany and United Kingdom using the European Community Household Panel (ECHP). We obtain unambiguous higher discrimination in Germany for a wide set of measures

Keywords: discrimination; wages; latent class model; finite mixture models. (search for similar items in EconPapers)
JEL-codes: J60 J70 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2006
New Economics Papers: this item is included in nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2006-38

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