Performance pay and the white-black wage gap.(Author abstract)(Report) Heywood, John S.; Parent, Daniel

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Heywood, John S. ; Parent, Daniel
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Journal of Labor Economics
Working class whites -- Comparative analysis; Working class whites -- Compensation and benefits; Blacks -- Compensation and benefits
Academic; Trade
We show that the reported tendency for performance pay to be associated with greater wage inequality at the top of the earnings distribution applies only to white workers. This results in the white-black wage differential among those in performance pay jobs growing over the earnings distribution even as the same differential shrinks over the distribution for those not in performance pay jobs. We show that this remains true even when examining suitable counterfactuals that hold observables constant between whites and blacks. We explore reasons behind our finding focusing on the interactions between discrimination, unmeasured ability, and selection.
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