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On The Measurement Of Illegal Wage Discrimination: The Michael Jordan Paradox

Author

Listed:
  • Juan Prieto Rodríguez

    (Universidad de Oviedo)

  • Juan Gabriel Rodríguez

    (Universidad Rey Juan Carlos)

  • Rafael Salas

    (Universidad Complutense de Madrid)

Abstract

Standard wage discrimination models assume that independent observers are able to distinguish a priori which workers are suffering from discrimination. However, this assumption may be inadequate when severe penalties can be imposed on discriminatory employers. Antidiscrimination laws will induce firms to behave in such a way that independent observers (for instance, lawyers, economists) cannot easily detect discriminatory practices. This problem can be solved by estimating the discriminatory wage gap using finite mixture or latent class models because these procedures do not require the a priori classification of workers. In fact, the standard discrimination model can be seen as a particular case of our method when the probabilities of belonging to a group are fixed (to one or zero). We estimate discrimination coefficients for Germany and United Kingdom using the European Community Household Panel (ECHP). We obtain unambiguous higher discrimination in Germany for a wide set of measures

Suggested Citation

  • Juan Prieto Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, 2006. "On The Measurement Of Illegal Wage Discrimination: The Michael Jordan Paradox," Working Papers 38, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2006-38
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2006-38.pdf
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    References listed on IDEAS

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    Cited by:

    1. Juan Gabriel Rodriguez & Rafael Salas & Juan Prieto-Rodriguez, 2008. "A theoretical model of wage discrimination with inspection fines," Economics Bulletin, AccessEcon, vol. 10(3), pages 1-9.
    2. repec:ebl:ecbull:v:10:y:2008:i:3:p:1-9 is not listed on IDEAS

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    More about this item

    Keywords

    discrimination; wages; latent class model; finite mixture models.;
    All these keywords.

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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