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Natural Groups and Economic Characteristics as Driving Forces of Wage Discrimination

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Listed:
  • Thorsten Chmura

    (Nottingham University, Business School)

  • Sebastian J. Goerg

    (Department of Economics, Florida State University)

  • Pia Weiss

    (Nottingham University, Business School)

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.

Suggested Citation

  • Thorsten Chmura & Sebastian J. Goerg & Pia Weiss, 2016. "Natural Groups and Economic Characteristics as Driving Forces of Wage Discrimination," Working Papers wp2016_04_01, Department of Economics, Florida State University.
    • Handle: RePEc:fsu:wpaper:wp2016_04_01
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    4. Armenak Antinyan & Tigran Aydinyan & Anna Ressi & Lilia Wasserka-Zhurakhovska, 2023. "An Experimental Analysis of In-Group Favoritism and Out-Group Discrimination in the Gain and Loss Domain," CESifo Working Paper Series 10606, CESifo.

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    More about this item

    Keywords

    wages; discrimination; social identity; natural groups; lab experiment; gift-exchange; migrant-workers; China;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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