Natural groups and economic characteristics as driving forces of wage discrimination

Chmura, Thorsten and Goerg, Sebastian J. and Weiss, Pia (2016) Natural groups and economic characteristics as driving forces of wage discrimination. European Economic Review . ISSN 0014-2921

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Abstract

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.

Item Type: Article
Keywords: Wages; Discrimination; Social identity; Natural groups; Lab experiment; Gift-exchange; Migrant-workers; China
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > Nottingham University Business School
Identification Number: https://doi.org/10.1016/j.euroecorev.2016.04.005
Depositing User: Fuller, Stella
Date Deposited: 19 Sep 2016 10:05
Last Modified: 19 Sep 2016 10:07
URI: http://eprints.nottingham.ac.uk/id/eprint/36959

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