PERFORMANCE PAY AND THE WHITE-BLACK WAGE GAP

Daniel Parent () and John Heywood

Departmental Working Papers from McGill University, 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.

JEL-codes: J15 J31 J33 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2009-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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http://www.mcgill.ca/files/economics/HP_black_white_v7_jan2009.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:mcl:mclwop:2009-07

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