Wage discrimination occurs when, due to the operation of the labor market, similar workers receive different wages on the basis of race, sex, ethnicity, age, sexual orientation, or other ascribed characteristic not directly related to productivity. Workers subject to wage discrimination may earn lower wages in a given job, be assigned to low-wage jobs within firms, or employed in low-wage firms.
Not all wage differentials are discriminatory. If more group A than group B workers are willing to work in dangerous but highly paid jobs, on average, As may earn more than Bs do. But provided that wages are based on the nature of the job and not group membership, the wage differential need not reflect wage discrimination. Similarly, if As are paid less because they are less skilled, there is no wage discrimination unless their lower skills reflect their expectation that their skills will not be rewarded.
We rarely measure worker productivity directly and, therefore, we cannot test whether equally productive workers earn different wages based on their group membership. Instead, we ask whether apparently similar workers of different races, sex, etc., receive different wages. The difficulty with this approach is determining the dimensions along which workers should be similar. For example, suppose we compared men and women with undergraduate degrees in biology and found that women have lower wages. Suppose we also found that for those of this group that are teachers, wages are similar for such men and women. We might conclude that many women choose to be teachers, perhaps in order to be with their children after school and during vacations. Women (and men) with these preferences accept lower wages, so there is no wage discrimination. However, perhaps women face significant wage discrimination in jobs outside teaching, so that those who do not teach are the very talented or lucky few who find high-wage jobs outside teaching. In this case, we miss the wage discrimination by comparing men and women in the same occupation.
Moreover, if firms discriminate by offering low wages to, for example, African Americans, individuals offered these low wages may respond by not working, and we will only observe wages for those African Americans employed at good wages by nondiscriminating firms. Ignoring individuals who are not working underestimates the black-white wage differential and thus the extent of wage discrimination.
Estimates of the degree of wage discrimination, and even its existence, depend critically on the factors for which we control. There are large earnings differentials between men and women, blacks and whites, and non-Hispanic whites and Hispanics if we take no other factors into account. Skin-shade studies have found that darker Hispanics and African Americans are paid less than Hispanics and Africans with lighter complexions. Controlling for cognitive test scores in high school eliminates much of the difference between black and white men, but a significant difference reappears if we also control for years of education. Differences in the earnings of black and white (employed) women are modest, but are much larger if we take account of the potential earnings of nonworkers. Much of the Hispanic–non-Hispanic wage differential can be “accounted for” by education and by knowledge of English. Career interruptions are important in “explaining” female-male wage differentials.
In his pioneering work The Economics of Discrimination (1971), Gary Becker argued that labor market competition will eliminate wage discrimination. If, for example, blacks are paid less than are equally productive whites, unprejudiced employers will hire blacks and make more profit than do employers who hire whites. Nondiscriminating firms will expand, hire more blacks, and drive some discriminating firms out of business. The process continues until black and white wages are equalized. Some discriminating firms that hire only white workers may survive, but there will be no wage discrimination. Similarly, if workers discriminate by requiring a premium to work with blacks, they will be employed in segregated firms, but wages will not depend on group membership.
This conclusion must be tempered somewhat if customers are prejudiced. In this case, blacks will work in jobs where race is invisible and, if there are enough such jobs, receive the same wages as comparable whites. However, in areas such as professional sports, where workers have highly specialized skills and race is clearly visible, wage discrimination may persist.
If labor markets operate less smoothly than the competitive model implies, through a variety of mechanisms they can exacerbate, not eliminate, the effect of prejudice. For example, firms that announce high wages to attract many applicants may deter black applicants who anticipate losing out to white applicants. Instead, blacks may apply to low-wage jobs in order to avoid competition with whites. Wage discrimination may also persist if workers and firms act collectively and wages are governed by bargaining. Workers may coalesce to exclude those who are “different,” and firms may pay lower wages to those with less bargaining power.
Other models also permit persistent wage discrimination. In social distance models, interactions between heterogeneous groups are costly. The market minimizes such interactions and thus encourages segregation, but complete segregation is impossible. Members of subordinate groups must either adopt the dominant group’s norms of behavior and social interaction or accept lower wages.
Social distance and the absence of shared networks may also reduce the ability of employers to evaluate potential employees from other groups. In this case, employers may engage in statistical discrimination, whereby they rely more on group membership and less on information about the particular individual. Such workers have less incentive to make unobservable investments in themselves (e.g., work hard in school) and thus will earn less than do observably similar workers whom employers evaluate individually. However, they may also have an incentive to make more observable investments (e.g., years of schooling). Similar mechanisms apply when statistical discrimination reflects self-confirming stereotypes rather than social distance.
In the United States the Equal Pay Act of 1963 outlawed payment of different wages for the same job on the basis of race, but this had little effect because most wage discrimination probably arises through workers holding different jobs and working in different firms. The 1964 Civil Rights Act forbade employment discrimination based on race, ethnicity, sex, or religion, and Executive Order 11246 required federal contractors to take affirmative action to ensure that they did not discriminate on the basis of race. Over time, the scope of civil rights legislation in the United States has been extended so that it covers, in various degrees, age, disability, and sexual orientation, as well as race, ethnicity, sex, and religion. Many countries have similar laws. Although most analysts believe that these policies reduced wage discrimination against African Americans, women, and other groups, the extent of the effect is hotly debated.
SEE ALSO Discrimination; Discrimination, Racial; Discrimination, Statistical; Discrimination, Taste for; Discrimination, Wage, by Age; Discrimination, Wage, by Gender; Discrimination, Wage, by Occupation; Discrimination, Wage, by Race
Altonji, Joseph G., and Rebecca M. Blank. 1999. Race and Gender in the Labor Market. In Handbook of Labor Economics, Vol. 3C, ed. Orley Ashenfelter and David Card, 3143–3259. Amsterdam, New York, and Oxford: Elsevier, North-Holland.
Becker, Gary. 1971. The Economics of Discrimination. Chicago: University of Chicago Press.
Lang, Kevin. 2007. Poverty and Discrimination. Princeton, NJ: Princeton University Press.
"Discrimination, Wage." International Encyclopedia of the Social Sciences. 2008. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3045300613.html
"Discrimination, Wage." International Encyclopedia of the Social Sciences. 2008. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045300613.html
Discrimination, Wage, By Race
Discrimination, Wage, By Race
Wage discrimination involves differential market wage payments for otherwise identical persons. Wage discrimination may occur because of prejudice (statistical discrimination), bigotry and nepotism (animus toward other-group persons and favoritism toward on-group persons), or because it enhances profitability (racism). An early work by Francis Y. Edgeworth in 1922 considered equal work for equal pay by sex, matching the marginal utility of the employer with the marginal disutility of the employee. This concept was accepted with some reservations and adjustments. Equal work means that the worker is indifferent between two tasks, and equal pay means that wage is equal to the marginal product of labor.
Gunnar Myrdal discussed animosity of whites against blacks in the United States from the point of view of the cumulative methodology where increased prejudices caused more discrimination and less employment, worsening both standards of living and health conditions for blacks. Discrimination causes a cumulative degradation of blacks’ standard of living, education, health, morals, and social conditions.
Gary Becker’s preference theory of discrimination advanced a coefficient of discrimination, d i measured under free competition. Assuming away differences in capital, the employer’s utility function depends on profits, and the types of workers—whites and blacks. If workers are equally productive, then discrimination enters through the tastes and preferences of the employer. An employer is willing to pay a higher wage, π(1 + d i) to exclude someone from employment. An employee is willing to accept a lower wage, , to avoid working near to someone. A consumer is willing to pay a higher price, p (1 + d k) not to be served by someone. The result is a kinked demand curve for labor if we plot the ratio of the wages of blacks to whites, women to men, young to old, or unskilled to skilled against the person discriminated against. When the ratio is unity, no discrimination happens, d i = 0, and the demand curve is flat. The kink occurs where the wage ratio starts to fall from unity, indicating that the discrimination coefficient, d i, is becoming larger. At equilibrium, the downward sloping part of the demand curve cuts a normal supply curve that measures more labor offered as the wage ratio increases. One implication of equilibrium is that since minority workers offer the same productivity at lower wages, a discriminating employer will have to pay higher wages to others.
Phelps advanced a statistical discrimination model to explain why, for instance, insurance companies price auto insurance higher for teenage males than females. Companies use the average behavior of the group and not individual characteristics in pricing their policies. Another popular model is Barbara Bergmann’s expansion and articulation of the crowding hypothesis. The productivity of minorities who are crowded into certain occupations may depend on group effort and having minorities in a group can be perceived as a hindrance to social interaction, lowering productivity and causing wages to fall. An index of occupational segregation showing by how much mobility between occupations is necessary to equalize wages has been declining over time. Other models consider different market structures.
William A. Darity Jr. and Rhonda Williams argue that governmental actions that allow free occupational choice is not sufficient to eliminate discrimination due to cultural barriers that create imperfect markets. Darity found that research studies on discrimination lack a unified methodology and that some studies that subscribe to the positive methodology find discrimination antithetical to perfect markets. However, Patrick L. Mason has presented a theoretical model and empirical analysis showing that racial wage and occupational discrimination may enhance the profitability of firms and protect dominant group workers from competition in the more desirable occupations. The theoretical analysis by Darity and Williams and Mason is constructed on the notion that racial discrimination is sustained by racism among employers and racial animus among workers. Moreover, in their discussion of the economics of identity, Darity, Mason, and Stewart show that the persistence of racial group identities, that is, the origins of the tastes for discrimination, may be found in the material incentives associated with inter-group antagonism and intra-group altruism.
Since the mid-1970s, government statistics for the United States have indicated that the wage ratio for blacks to whites has been stable indicating a large earning gap. The unemployment rate for blacks is about twice that of whites, but results are similar when comparing unemployment rates for white and black males against the rates for white and black women. For the same timeframe, the index of gender segregation (male vs. female) fell by approximately 16 percent from a high of approximately 68 percent in 1973, indicating that women have made considerable entry into professional occupations. The index for previous age discrimination confirming racial segregation (black vs. white) shows the same trend, falling from 37 to 24 percent for women and from 37 to 26 percent for men.
SEE ALSO Discrimination; Discrimination, Racial; Discrimination, Statistical; Discrimination, Taste for; Discrimination, Wage; Discrimination, Wage, by Age; Discrimination, Wage, by Gender; Discrimination, Wage, by Occupation
Allport, Gordon W. 1958. The Nature of Prejudice. New York: Doubleday Anchor Books.
Altonji, Joseph G., and Thomas A. Dunn. 2000. An Intergenerational Model of Wages, Hours, and Earnings. Journal of Human Resources 35 (2): 221–258.
Altonji, Joseph G., Ulrich Doraszelski, and Lewis Segal. 2000. Black/White Differences in Wealth. Economic Perspectives 24 (1): 38–50.
Arrow, Kenneth J. 1985. Collected Papers of Kenneth J. Arrow: Applied Economics. Vol. 6. Cambridge, MA: The Belknap Press of Harvard University Press.
Becker, Gary S. 1957. The Economics of Discrimination: An Economic View of Racial Discrimination. 2nd ed. Chicago: University of Chicago Press.
Bergmann, Barbara. 1971. The Effect of White Income on Discrimination in Employment. Journal of Political Economy 79: 294–313.
Blau, Francine, and John W. Graham. 1990. Black-White Differences in Wealth and Asset Composition. Quarterly Journal of Economics 105 (2): 321–339.
Darity, William A., Jr. 1984. Labor Economics: Modern Views. Boston: Kluwer-Nijhoff Publishing.
Darity, William A., Jr., and Jessica Gordon Nembhard. 2000. Racial and Ethnic Economic Inequality: The International Record. American Economic Review 90: 308–311.
Darity, William A., Jr., and Patrick L. Mason. 1998. Evidence on Discrimination in Employment: Codes of Color, Codes of Gender. Journal of Economic Perspectives 12: 63–90.
Darity, William A., Jr., and Rhonda M. Williams. 1985. Peddlers Forever? Culture, Competition, and Discrimination. American Economic Review 256–261.
Darity, William A., Jr., James B. Stewart, and Patrick L. Mason. 1999. Male Interracial Wage Differentials: Competing Explanations. Cambridge Journal of Economics 23 (May): 1–39.
Darity, William A., Jr., James B. Stewart, and Patrick L. Mason. 2006. The Economics of Identity: The Origin and Persistence of Racial Norms. Journal of Economic Behavior and Organizations 60 (3): 283–305.
Edgeworth, Francis Y. 1922. Equal Pay to Men and Women for Equal Work. The Economic Journal 32 (128): 431–457.
Mason, Patrick L. 1995. Race, Competition and Differential Wages. Cambridge Journal of Economics 19 (4): 545–568.
Myrdal, Gunnar. 1944. An American Dilemma. New York: Harper.
Phelps, Edmund. 1972. The Statistical Theory of Racism and Sexism. American Economic Review (September): 659–661.
Schelling, Thomas. 1969. Models of Segregation. American Economic Review, Papers and Proceedings 59 (2): 488–493.
"Discrimination, Wage, By Race." International Encyclopedia of the Social Sciences. 2008. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3045300617.html
"Discrimination, Wage, By Race." International Encyclopedia of the Social Sciences. 2008. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045300617.html
Discrimination, Wage, By Gender
Discrimination, Wage, By Gender
Gender wage discrimination occurs when employers pay women lower wages than identically qualified male workers. Whether such employers are acting on their own preferences or those of their firm’s owners, managers, employees, or customers, the unequal treatment of women violates norms of equity and considerations of market efficiency and is the subject of policy research and debate in most industrial countries.
Theorists populate the demand side of labor markets with employers who must choose whom to hire and how much to pay them relative to the value of their productivity. Assuming that firm owners and their agents are economically rational and that they must accommodate the wishes of all firm constituents, paying qualified women a wage that is less than their productivity’s worth while paying men the value of their productivity must optimize profits. Thus Gary Becker (1971) argues that an employer’s choice to discriminate against a particular group can be economically rational but can persist only under noncompetitive product market conditions.
The larger the number of firms competing with a discriminatory employer for male workers, the higher the premium in pay men can garner. However, the larger the number of firms competing with an employer for customers in its product market, the more difficult it is for an individual employer to maintain its discriminatory behavior: competitors who are more willing to hire women (and pay them better than the discriminatory firm) will have lower labor costs and the ability to charge lower prices in the product market. Though the theory is compelling to many, the notion that product market competition (as opposed to antidiscrimination labor market policy) reduces wage discrimination has not been proven empirically and fails to explain the persistence of wage discrimination by gender.
As pointed out by Becker (1998), economists view the supply side of labor markets as populated by workers who choose to equip themselves in specific ways for the jobs available to them. Because average worker characteristics differ by gender, women’s choices about education, training, working hours, and number and length of job interruptions (along with socialization by teachers and parents) are often blamed in part for women’s overrepresentation in some fields and scarcity in others. The larger the share of women among the unemployed in a particular market, the greater the need for women to compete for scarcer opportunities—offering their services for lower wages and benefits than would otherwise be necessary.
Barbara Bergmann (1986) has shown that if the discriminatory barriers were removed, women’s wages would rise relative to the wages of men. Scholars debate the extent to which discriminatory employer practices versus women’s own choices bar women’s access to jobs in some markets and crowd them into others. This is not a particularly productive policy debate, however. It sidesteps the most relevant policy questions: How do we reduce the ability of gender norms, employers, and markets individually and collectively to limit women’s participation in specific occupations? How do we prevent employers from paying qualified women less than their male counterparts when they do choose the same industries, occupations, hours, and other labor market characteristics (a problem convincingly documented in Blau et al. 2001).
Gender wage discrimination persists as women are systematically denied access to jobs in particular markets. Scholars such as Kenneth Arrow (1973) attribute persistent labor market discrimination to statistical discrimination—employers ranking and paying individual applicants according to average gender group attributes rather than individual ability and productivity. Statistical discrimination is sometimes deemed economically rational because information about individual worker productivity is costly and difficult to attain. Such discrimination persists because gender norms and stereotypes are powerful and because firms’ discriminatory practices are difficult to detect and prove. As explained by Lisa Saunders and William Darity Jr. (2003), wage discrimination by gender is further complicated by the fact that the degree of gender wage gaps differs according to the race, age, sexual orientation, and other identity markers of the female or male groups under consideration. The maintenance of social stratification on the basis of multiple identities insures lower wages for a significant share of workers than would otherwise attain more (see Darity et al. 2006). This is especially problematic for workers in competitive firms and more onerous under conditions of globalization. It is also problematic for families that increasingly depend upon women’s earnings for their immediate and intergenerational economic security. It could be argued that a more effective policy approach to wage discrimination by gender would assert a definition of discrimination that acknowledges the complex ways it actually manifests in labor markets, a perspective on the roles played by structural changes in the global economy, and a rigorous analysis of wage inequality’s effects on inequality in wealth.
SEE ALSO Arrow, Kenneth J.; Becker, Gary; Crowding Hypothesis; Discrimination; Discrimination, Racial; Discrimination, Statistical; Discrimination, Taste for; Discrimination, Wage; Discrimination, Wage, by Age; Discrimination, Wage, by Occupation; Discrimination, Wage, by Race; Economics, Stratification; Gender Gap; Inequality, Gender; Labor Market; Stratification
Arrow, Kenneth. 1973. The Theory of Discrimination. In Discrimination in Labor Markets, eds. Orley Ashenfelter and Albert Rees, 3–33. Princeton, NJ: Princeton University Press.
Becker, Gary S. 1971. The Economics of Discrimination. 2nd ed. Chicago: University of Chicago Press.
Becker, Gary S. 1993. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. 3rd ed. Chicago: University of Chicago Press.
Bergmann, Barbara. 1986. The Economic Emergence of Women. New York: Basic Books.
Blau, Francine D., Marianne A. Ferber, and Anne E. Winkler. 2001. The Economics of Women, Men, and Work. 4th ed. Upper Saddle River, NJ: Prentice Hall.
Darity, William, Jr., James Stewart, and Patrick L. Mason. 2006. The Economics of Identity: The Origin and Persistence of Racial Norms. Journal of Economic Behavior and Organizations 60 (3): 283–305.
Saunders, Lisa, and William Darity Jr. 2003. Feminist Theory and Racial Inequality. In Feminist Economics Today: Beyond Economic Man, eds. Marianne A. Ferber and Julie A. Nelson, 101–114. Chicago: University of Chicago Press.
"Discrimination, Wage, By Gender." International Encyclopedia of the Social Sciences. 2008. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3045300615.html
"Discrimination, Wage, By Gender." International Encyclopedia of the Social Sciences. 2008. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045300615.html
Discrimination, Wage, By Age
Discrimination, Wage, By Age
The differential treatment of a group based solely on the grounds of chronological age is known as age discrimination. Unlike race and gender, age is immediately and strongly tied to experience and future job tenure. In addition, a worker can age while still in the same job, whereas changing one’s group is unlikely for women and racial and ethnic minorities. Problems of age discrimination are important from a policy standpoint because many older people are able to work longer than was the case with previous generations. Many also wish to work longer, while some may not have saved adequately for retirement. A number of plans to fix Social Security budgetary problems require continued work at older ages.
Employers can discriminate by age across several areas: wages, promotions, hiring, firing and layoffs, and forced retirement. On average, older workers make more money than younger workers because age is highly correlated with both general labor-market work experience and tenure (or longevity of employment) at a particular employer, and experienced workers generally make more money than inexperienced workers. It is difficult to disentangle the effects of age from experience. Older workers may be less likely than younger workers to accept employment at lower wages because they are used to being paid higher wages based on their experience. Promotion probability is also related to experience. Older workers are less likely to be hired or fired than younger workers, but they are often removed through retirement packages.
Not much is known about group differences in age discrimination. Some studies have found that women are affected by age discrimination at an earlier age than men, but others have found no difference between genders in this regard. Even less is known about differences in age discrimination by race. Group characteristics of the person doing the potential discrimination, such as age, race, and gender, among others, also determine the presence and extent of discrimination.
There are a number of reasons that employers could discriminate against older workers. Employers may irrationally dislike older workers, employees may dislike working with older workers, or consumers may dislike buying products and services provided by older workers. This irrational dislike is also known as animus or taste-based discrimination. Although Gary Becker’s models of taste-based discrimination in a competitive market for race and gender can be used to model age discrimination, they are limited by the correlation of age and returns to experience in most jobs in the real world, and by the fact that workers age while employed. No evidence has been found for taste-based discrimination against older workers.
Employers could also discriminate against older workers because of incorrect stereotypes, and because, on average, older workers may be less productive or more expensive than younger workers, causing employers to be reluctant to hire them when there are screening costs. This type of differential treatment is termed statistical discrimination. When asked why other companies may be reluctant to employ older workers, human resources managers cite shorter career potential; lack of energy, flexibility, or adaptability; higher costs for benefits and salary; more health problems, leading to more absences; knowledge and skills obsolescence; a need to promote younger workers; suspicions that an older worker might leave his or her current job to retire; and fear of discrimination lawsuits. Many of these reasons support either the incorrect stereotypes hypothesis or the statistical discrimination hypothesis.
Age discrimination against workers over the age of forty is prohibited by the Age Discrimination in Employment Act (ADEA) of 1967/68, which prohibits discrimination in advertisement, hiring, promotions, and firing, except in cases where there is a Bona Fide Occupational Qualification (BFOQ). A BFOQ is allowed if the job requires a member of a certain group to perform it. For example, in a movie, the studio would be allowed to advertise for and hire a young white woman to fill the part of a young white woman. With age, BFOQs are sometimes allowed for safety reasons even if a percentage of older workers would be able to safely perform the job tasks. Examples of BFOQ for safety reasons include mandatory retirement for airline pilots and minimum hiring age for bus drivers and air traffic controllers.
SEE ALSO Discrimination; Discrimination, Racial; Discrimination, Statistical; Discrimination, Taste for; Discrimination, Wage; Discrimination, Wage, by Gender; Discrimination, Wage, by Occupation; Discrimination, Wage, by Race
Crew, James C. 1984. Age Stereotypes as a Function of Race. The Academy of Management Journal 27 (2): 431–435.
Diamond, Peter A., and Jerry A. Hausman. 1984. The Retirement and Unemployment Behavior of Older Men. In Retirement and Economic Behavior, ed. Henry J. Aaron. Washington, DC: Brookings Institution.
Duncan, Colin, and Wendy Loretto. 2004. Never the Right Age? Gender and Age-Based Discrimination in Employment. Gender, Work & Organization 11 (1): 95–115.
Kite, Mary E., and Lisa Smith Wagner. 2002. Attitudes Toward Older Adults. In Ageism: Stereotyping and Prejudice Against Older Persons, ed. Todd D. Nelson. Cambridge, MA: MIT Press.
Lahey, Joanna N. 2005. Age, Women, and Hiring: An Experimental Study. National Bureau of Economic Research (NBER) Working Paper No. 11435. Cambridge, MA: NBER.
Nelson, Todd D. 2002. Ageism: Stereotyping and Prejudice Against Older Persons. Cambridge, MA: MIT Press.
Neumark, David. 2001. Age Discrimination Legislation in the United States. National Bureau of Economic Research (NBER) Working Paper No. 8152. Cambridge, MA: NBER
Rhine, Shirley H. 1984. Managing Older Workers: Company Policies and Attitudes: A Research Report from the Conference Board. New York: The Conference Board.
Joanna N. Lahey
"Discrimination, Wage, By Age." International Encyclopedia of the Social Sciences. 2008. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3045300614.html
"Discrimination, Wage, By Age." International Encyclopedia of the Social Sciences. 2008. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045300614.html
Discrimination, Wage, By Occupation
Discrimination, Wage, By Occupation
Wage discrimination refers to paying women, minorities, or other culturally subordinate individuals lower wages than comparably skilled men, whites, or other privileged groups. This can happen when women or minorities are hired or promoted into lower-paying jobs, or when they are paid less for performing the same work in the same workplace.
In general, past research has found that wage discrimination increases with the rank of the job. Thus, the term rank segregation is sometimes used to indicate that job segregation by status is associated with job desirability. Most common have been analyses that demonstrate race and sex wage gaps after controlling for legitimate measures of individual productivity, such as education, experience, or job skills. These studies typically find that most wage inequality is produced by job segregation, though in some contexts there may be additional discrimination in wage setting within jobs. The more desirable the job, the more likely it has within-job wage discrimination and the more likely that women and minorities are excluded from the job.
Employment discrimination and job segregation are the product of a series of well-recognized selection and evaluation mechanisms, such as prejudice, cognitive bias, statistical discrimination, social closure around desirable employment opportunities, and network-based recruitment. These mechanisms tend to be mutually reinforcing and lead to status expectations about the appropriateness of different types of people for different jobs, as well as to expectations as to the value of those jobs to the employer. Bias in evaluation processes, which in turn may lead to between- or within-job wage inequalities, can result from self-conscious prejudice, but it is often produced by subtle social psychological processes of cognitive bias, stereotyping, and in-group preferences. Employers, like everyone else, tend to use preexisting cultural categories such as sex or race to organize and interpret information. These cognitive processes can lead to more favorable evaluations and outcomes for high status individuals (males, majority race) and lower evaluations for others (women, minorities). The theory of statistical discrimination points out that employers are more likely to discriminate when jobs have more responsibility, longer periods of training, or simply pay more, because the cost of hiring an unqualified worker rises in these situations. Economists tend to describe this process in terms of explicit cost-benefit calculations. Sociologists and psychologists see this as a more subtle social psychological process of cognitive bias and stereotyping.
The term social closure refers to discrimination around the preservation of group privilege. Social closure processes are consistent with the discriminatory mechanisms already outlined—prejudice, cognitive bias, and statistical discrimination. They are not merely conditioned by individual psychology or the profit motive, however, but also by both social accountability to one’s status group and the elaboration of cultural stories that explain and justify status-based inequalities. Because social networks tend to be formed around friendship and family ties, employee recruitment procedures that rely on professional or current workforces will also tend to produce social closure-based opportunity hoarding.
Discrimination and job segregation can be moderated by organizational practices that reduce the influence of personal biases or social expectations. Recent research suggests that control systems that hold managers accountable for equal opportunity outcomes are more effective than those that target unconscious bias processes.
SEE ALSO Discrimination; Discrimination, Racial; Discrimination, Statistical; Discrimination, Taste for; Discrimination, Wage; Discrimination, Wage, by Age; Discrimination, Wage, by Gender; Discrimination, Wage, by Race
Fiske, Susan T. 1998. Stereotyping, Prejudice, and Discrimination. In Handbook of Social Psychology, ed. Daniel T. Gilbert, Susan T. Fiske, and Gardner Lindzey, 357–411. New York: McGraw Hill.
Kalev, Alexandra, Frank Dobbin, and Erin Kelly. 2006. Best Practices or Best Guesses? Assessing the Efficacy of Corporate Affirmative Action and Diversity Policies. American Sociological Review 71 (4): 589–617.
Mason, Patrick. 1999. Male Interracial Wage Differentials: Competing Explanations. Cambridge Journal of Economics 23 (3): 1–39.
Ridgeway, Cecilia. 1997. Interaction and the Conservation of Gender Inequality: Considering Employment. American Sociological Review 62 (2): 218–235.
Royster, Deirdre. 2003. Race and the Invisible Hand: How White Networks Exclude Black Men from Blue-Collar Jobs. Berkeley: University of California Press.
Tomaskovic-Devey, Donald. 1993. Gender and Racial Inequality at Work: The Sources and Consequences of Job Segregation. Ithaca, NY: ILR Press.
Tomaskovic-Devey, Donald, Melvin Thomas, and Kecia Johnson. 2005. Race and the Accumulation of Human Capital across the Career: A Theoretical Model and Fixed Effects Application. American Journal of Sociology 111: 58–89.
"Discrimination, Wage, By Occupation." International Encyclopedia of the Social Sciences. 2008. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3045300616.html
"Discrimination, Wage, By Occupation." International Encyclopedia of the Social Sciences. 2008. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045300616.html