Selection Wages and Discrimination

Schlicht, Ekkehart (September 2009): Selection Wages and Discrimination. Discussion Papers in Economics 2009-14

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 and improve 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.

• Item Type: Paper
• Form of publication: Submitted Version
• Keywords: Discrimination, selection wages, efficiency wages, hiring standards, monopsony, employment criteria, wage posting, Reder competition, social roles, social stereotypes, social multiplier, statistical discrimination, taste discrimination
• Faculties: Economics; Economics > Munich Discussion Papers in Economics; Economics > Munich Discussion Papers in Economics > Micro-Economics; Economics > Munich Discussion Papers in Economics > Labor; Economics > Munich Discussion Papers in Economics > Behavioral Economics; Economics > Chairs > Chair of Institutional Economics (closed)
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• JEL Classification: J31, J7, B54, D13, D42
• Language: English

References

Becker, G. S. 1971, The Economics of Discrimination (Economic Research Studies), second ed., University Of Chicago Press, online at http://amazon.com/o/ASIN/0226041166/.

Büttner, T., P. Jacobebbinghaus, and J. Ludsteck 2009, “Occupational Upgrading and the Business Cycle in West Germany,” Economics: The Open-Access, Open-Assessment E-Journal, 3, online at http://www.economics-ejournal.org/economics/discussionpapers/ 2009-34.

Cain, G. G. 1986, “The Economic Analysis of Labor Market Discrimination: A Survey,” in: O.Ashenfelter and R.Layard (eds.), Handbook of Labor Economics, chap. 13, pp. 693–785, Elsevier.

Devereux, P. J. 2002, “Occupational Upgrading and the Business Cycle,” Labour, 16, 423–52, online at http://ideas.repec.org/a/bla/labour/v16y2002i3p423-452.html.

Glaeser, E. L., B. I. Sacerdote, and J. A. Scheinkman 2003, “The Social Multiplier,” Journal of the European Economic Association, 1, 345–353, online at http://ideas.repec.org/ a/tpr/jeurec/v1y2003i2-3p345-353.html.

Hirsch, B. forthcoming, “The Gender Pay Gap Under Duopsony: Joan Robinson Meets Harold Hotelling,” Scottish Journal of Political Economy.

Hirsch, B., M. König, and J. Möller 2009, “Is There a Gap in the Gap? Regional Di.er-ences in the Gender Pay Gap,” IZA Discussion Papers 4231, Institute for the Study of Labor (IZA), online at http://ideas.repec.org/p/iza/izadps/dp4231.html.

Hirsch, B., T. Schank, and C. Schnabel 2008, “Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany,” Working Papers 1111, Princeton University, Department of Economics, Industrial Relations Section., online at http://ideas.repec.org/p/pri/indrel/ 1111.html.

Kahneman, D., J. L. Knetsch, and R. Thaler 1986, “Fairness as a Constraint on Profit Seeking: Entitlements in the Market,” American Economic Review, 76, 728–41, online at http://ideas.repec.org/a/aea/aecrev/v76y1986i4p728-41.html.

Lazear, E. P. and S. Rosen 1990, “Male-Female Wage Differentials in Job Ladders,” Journal of Labor Economics, 8, S106–23, online at http://ideas.repec.org/a/ucp/jlabec/ v8y1990i1ps106-23.html.

Manning, A. 2005, Monopsony in Motion: Imperfect Competition in Labor Markets, Princeton University Press, online at http://amazon.com/o/ASIN/0691123284/.

Marshall, A. 1920, Principles of Economics, 8th ed., London: Macmillan, online at http: //www.econlib.org/library/Marshall/marPtoc.html, reprint 1949, .rst edition 1890.

Phelps, E. S. 1972, “The Statistical Theory of Racism and Sexism,” American Economic Review, 62, 659–61, online at http://ideas.repec.org/a/aea/aecrev/v62y1972i4p659-61.html.

Robinson, J. 1969, The Economics of Imperfect Competition, second ed., McMillan, London, first edition 1933.

Schlicht, E. 1978, “Labour Turnover, Wage Structure, and Natural Unemployment,” Journal of Institutional and Theoretical Economics, 134, 337–46, online at http://econpapers. repec.org/paper/lmumuenec/1255.htm.

Schlicht, E. 1981, “Reference Group Behaviour and Economic Incentives,” Journal of Institutional and Theoretical Economics, 137, 125–7 and 733–6, online at http://ideas.repec.org/p/lmu/ muenec/10623.html.

Schlicht, E. 1982, “A Robinsonian Approach to Discrimination,” Journal of Institutional and Theoretical Economics, 138, 64–83, online at http://www.semverteilung.vwl.uni-muenchen.de/ mitarbeiter/es/paper/schlicht_discrimination.pdf.

Schlicht, E. 2001, “Job Rents in a Stylized Labor Market,” in: S. K. Berninghaus and M. Braulke (eds.), Beiträge zur Mikro-und Makroökonomik, Festschrift für Hans-Jürgen Ramser, pp. 409–23, Springer-Verlag, online at http://econpapers.repec.org/paper/lmumuenec/1254. htm.

Schlicht, E. 2005, “Hiring Standards And Labour Market Clearing,” Metroeconomica, 56, 263–279, online at http://ideas.repec.org/a/bla/metroe/v56y2005i2p263-279.html.

Schlicht, E. 2007, “Wage Dispersion, Over-Qualification, and Reder Competition,” Economics: The Open-Access, Open-Assessment E-Journal, 1, online at http://www.economics-ejournal.org/ economics/journalarticles/2007-13.

Solow, R. 1979, “Another Possible Cause of Wage Stickiness,” Journal of Macroeconomics, 1, 79–82.

Stiglitz, J. E. 1973, “Approaches to the Economics of Discrimination,” American Economic Review, 3, 287–95.

Sulis, G. 2007, “What Can Monopsony Explain of the Gender Wage Differential in Italy?” Working Paper CRENoS 200713, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia, online at http://ideas.repec.org/p/cns/cnscwp/200713.html.