key topic

Workplace discrimination

In many jurisdictions, the law protects workers from being discriminated against on the basis of factors such as age, sexual orientation, gender, disability, race, appearance, and religion. These characteristics have been protected in many countries for over 50 years, yet the nature of protection remains a subject of substantial controversy.

  • Identifying and measuring economic discrimination

    Using decomposition methods helps measure both the amount and source of economic discrimination between groups

    Sergio Pinheiro Firpo, March 2017
    Differences in wages between men and women, white and black workers, or any two distinct groups are a controversial feature of the labor market, raising concern about discrimination by employers. Decomposition methods shed light on those differences by separating them into: (i) composition effects, which are explained by differences in the distribution of observable variables, e.g. education level; and (ii) structural effects, which are explained by differences in the returns to observable and unobservable variables. Often, a significant structural effect, such as different returns to education, can be indicative of discrimination.
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  • Disability and labor market outcomes

    Disability is associated with labor market disadvantage; recent evidence points to a causal relationship

    Melanie Jones, April 2016
    In Europe, about one in eight people of working age report having a disability; that is, the presence of a long-term limiting health condition. Despite the introduction of a range of legislative and policy initiatives designed to eliminate discrimination and facilitate retention of and entry into work, disability is associated with substantial and enduring employment disadvantages. Identifying the reasons for this is complex, but critical to determine effective policy solutions that reduce the social and economic costs of disability disadvantage.
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  • Beauty pays but does investment in beauty?

    Despite the large returns from an attractive appearance, the cost-effectiveness of investment in beauty is ambiguous

    Soohyung Lee, October 2015
    Being beautiful gives a person an advantage in many settings. Attractive people earn more and have an easier time getting hired. People spend large amounts of money on goods and services to enhance their beauty. Is this enhancement worth pursuing? Research suggests that the expected improvement in beauty from these goods and services is limited. Therefore, despite the large returns from having an attractive appearance, the cost-effectiveness of investment in beauty enhancement is ambiguous. For the average person, the monetary benefits of plastic surgery, medical treatments to increase height, and expensive clothing are not worth the cost.
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  • Does it pay to be beautiful?

    Physically attractive people can earn more, particularly in customer-facing jobs, and the rewards for men are higher than for women

    Eva Sierminska, June 2015
    It is a well-established view amongst economists that good-looking people have a better chance of employment and can earn more than those who are less physically attractive. A “beauty premium” is particularly apparent in jobs where there is a productivity gain associated with good looks, though this is different for women and men, and 
varies across countries. People also sort into occupations according to the relative returns to their physical characteristics; good-looking people take jobs where physical appearance is deemed important while less-attractive people steer away from them, or they are 
required to be more productive for the same wage.
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  • Sexual orientation and labor market outcomes

    Sexual orientation seems to affect job access and satisfaction, earning prospects, and interaction with colleagues

    Nick Drydakis, December 2014
    Studies from countries with laws against discrimination on the basis of sexual orientation suggest that gay and lesbian employees report more incidents of harassment and are more likely to report experiencing unfair treatment in the labor market than are heterosexual employees. Gay men are found to earn less than comparably skilled and experienced heterosexual men. For lesbians, the patterns are ambiguous: in some countries they have been found to earn less than their heterosexual counterparts, while in others they earn the same or more. Both gay men and lesbians tend to be less satisfied with their jobs than their heterosexual counterparts.
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  • Equal pay legislation and the gender wage gap

    Despite major efforts at equal pay legislation, gender pay inequality still exists in the developed economies. How can this be put right?

    Despite equal pay legislation dating back 50 years, American women still earn 22% less than their male counterparts. In the UK, with its Equal Pay Act of 1970, and France, which legislated in 1972, the gap is 21% and 17% respectively, and in Australia it remains around 17%. Interestingly, the gender pay gap is relatively small for the young but increases as men and women grow older. Similarly, it is large when comparing married men and women, but smaller for singles. Just what can explain these wage patterns? And what can governments do to speed up wage convergence to close the gender pay gap? Clearly, the gender pay gap continues to be an important policy issue.
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