Economics - Research Publications

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Testing for employee discrimination using matched employer-employee data: theory and evidence

Frijters, Paul ; Shields, Michael A. ; Theodoropoulos, Nikolaos ; Price, Stephen Wheatley ( 2004-09)

We use recent matched employer-employee data to directly investigate if white workershave a taste for racial discrimination in Britain. Based on a new structural model withindividual and firm heterogeneity, we develop and test two predictions. Firstly, whiteemployees with a taste for discrimination should report lower levels of job satisfaction thelarger the proportion of ethnic minorities at their workplace. Secondly, white employeeswould have to be compensated by higher wages if required to work alongside ethnic minorityco-workers. Both hypotheses are clearly supported for white males in our data, aftercomprehensively controlling for individual, job, and workplace characteristics. However,the evidence is weaker for females. The white male wage premium for working amongstonly ethnic minority co-workers, as compared to working only with whites, is about 12%.Importantly, it appears that neither of these effects operates via realised racial prejudiceat the workplace or white employees’ feelings concerning their job security.
The causal effect of income on health: evidence from German reunification

FRIJTERS, P. F. ; HAISKEN-DENEW, J. P. ; SHIELDS, M. ( 2005)