Performance Pay and the White-Black Wage Gap | Zendy

John S. Heywood | Zendy; Daniel Parent | Zendy

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Performance Pay and the White-Black Wage Gap

Author(s) -

John S. Heywood,

Daniel Parent

Publication year - 2012

Publication title -

journal of labor economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 8.184

H-Index - 109

eISSN - 1537-5307

pISSN - 0734-306X

DOI - 10.1086/663355

Subject(s) - wage , earnings , differential (mechanical device) , economics , performance related pay , distribution (mathematics) , labour economics , white (mutation) , wage inequality , inequality , counterfactual conditional , microeconomics , counterfactual thinking , psychology , incentive , social psychology , mathematical analysis , biochemistry , chemistry , mathematics , accounting , engineering , gene , aerospace engineering

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 that this remains true even when examining suitable counterfactuals that hold observables constant between whites and blacks. We explore reasons behind our finding focusing on the interactions between discrimination, unmeasured ability, and selection

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