Ethnic pay differentials

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Abstract
In this article an attempt is made to examine the adverse occupational distribution and earnings of ethnic minorities as a function of direct and indirect discrimination. Specifically, it is argued that when we make adjustment for differences in human capital, the distribution of individuals over jobs is not independent of race. Secondly, the article attempts to provide estimates of proportional wage differential in various job markets for ethnic minority and white male workers of similar personal and human capital characteristics performing similar job tasks. For example, when we control for education, training and length of service we find that the ethnic minority workers tend to be on lower salary and more precisely lower grades than their white counterparts. It is argued that Becker has underestimated the forces of discrimination operating in the labour market by explaining the differential wages and salaries purely in terms of the operation of the labour market.

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