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Selection wages and discrimination

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  • Schlicht, Ekkehart

Abstract

Applicants for any given job are more or less suited to fill it, and the firm will select the best among them. Increasing the wage offer attracts more applicants and makes it possible to raise the hiring standard, thereby improving the productivity of the staff. Wages that optimize on the trade-off between the wage level and the productivity of the workforce are known as selection wages. As men react more strongly to wage differentials than females, the trade-off is more pronounced for men and a profit-maximizing firm will offer a higher wage for men than for women in equilibrium. The argument is not confined to issues of sex discrimination; rather it is of relevance for all labor markets where labor heterogeneity is important and supply elasticities vary systematically across occupations.

Suggested Citation

  • Schlicht, Ekkehart, 2010. "Selection wages and discrimination," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-30.
    • Handle: RePEc:zbw:ifweej:20106
    DOI: 10.5018/economics-ejournal.ja.2010-6
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    References listed on IDEAS

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    Cited by:

    1. Boris Hirsch & Marion König & Joachim Möller, 2013. "Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(4), pages 412-439, September.
    2. Ekkehart Schlicht, 2016. "Efficiency wages: Variants and implications," IZA World of Labor, Institute of Labor Economics (IZA), pages 275-275, July.
    3. Johannes Ludsteck, 2014. "The Impact of Segregation and Sorting on the Gender Wage Gap: Evidence from German Linked Longitudinal Employer-Employee Data," ILR Review, Cornell University, ILR School, vol. 67(2), pages 362-394, April.

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    More about this item

    Keywords

    Discrimination; sex discrimination; occupational discrimination; regional discrimination; selection wages; efficiency wages; hiring standards; monopsony; employment criteria; wage posting; Reder competition; wage structure; inter-industry wage structure; employer size-wage effect; occupational wage structure;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • B54 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Feminist Economics
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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