Statistical Versus Taste Discrimination

Table 1 reports descriptive statistics on log starting wages, performance ratings, and log performance ratings. The wage differences between race and ethnic groups are similar for men and women, with whites earning about 19 percent more than blacks, and four to eight percent more than Hispanics. The difference in starting wages between men and women is about 10 to 14 percent, toward the lower figure for Hispanics. These sex-related differentials are somewhat small compared with representative samples of the U.S. work force, but the data here refer to starting wages of relatively young workers (29.5 years old, on average); existing work with other data sets documents the lower sex differences in wages for workers early in their careers (e.g., Light and Ureta, 1995).

Men Women
White Black Hispanic White Black Hispanic
Log starting wage 2.12 1.93 2.04 1.98 1.79 1.94
(.42) (.33) (.36) (.41) (.28) (.36)
Performance rating 78.10 74.43 73.48 79.29 76.66 78.37
(13.24) (16.16) (13.08) (14.58) (15.23) (12.48)
Log performance rating 4.34 4.28 4.28 4.35 4.31 4.35
(.19) (.30) (.20) (.23) (.24) (.17)
N 345 158 155 359 164 110

The performance ratings reveal that women in each race or ethnic group receive higher scores than men, on average, using either levels or logs. On the other hand, within sexes, whites generally receive higher ratings than blacks or Hispanics. The possibility that statistical discrimination generates evidence that looks like taste discrimination—which is the motivation for the test of statistical versus taste discrimination—requires lower average productivity of the lower-paid group. Since this does not apply to male-female differentials, the test for statistical versus taste discrimination is carried out only for race/ethnic differences for each sex considered separately. However, the second test regarding the quality of information about each demographic group is still pertinent; women could have higher average productivity, but if labor market information about them is worse, and mismatches costly, they could receive lower wages.