Impact of Racial Discrimination on Wage
There are still incidences of discrimination in the US, where individuals from particular racial group earn less compared to other people considered as dominant in the same job position. Economic offers a lot of empirical evidence that certain racial group including African American, Hispanic and Asian Americans earn a lower wage compared to their counterpart Native Americans. However, the estimate of the wage gap differs widely with variables such as the database used and decomposition methods. According to the efficiency-wage theory, employers do not necessarily pay workers the lowest possible wage rather than the higher wage to motivate them exhibit higher effort and attract better workers. The efficiency wage perspective lower wages among African Americans, Asian American and Hispanics is different from that of Native American receiving a higher wage. Firms assume that discriminated racial groups do not react with more effort to higher wage pay, and it may not be worth paying them a higher wage. The assumption of discrimination against Asian Americans, African American and Hispanics describe Native Americans as assertive, agent and work-oriented (Altman 101).
Psychological research put an explanation that can be interpreted as alike to an efficiency-wage explanation. The possibility that groups discriminated against are worse in negotiating for their wage and often for lower wage compared to dominate Native Americans in wage negotiation. This paper seeks to evaluate whether differences in wage among different racial groups is brought about by differences in education level. Because the choice of the experimental method lies in the fact that it allows the control of other factors influencing wages asked by discriminated groups that are difficult in other kinds of empirical studies. It is possible to see the efficiency-wage argument in one or other direction provide an explanation for the wage differential (Mankiw 403). The stereotype of African Americans, Native Americans, Hispanics and Asian Americans in the experiment setting is smaller role compared to real life.
There is a correlation between the level of education and wage differential. Wage gap between African Americans and whites converge with educational differences controls. On the other hand, Asian-white wage differences does not appear to be converging and controlled by educational differences. It is clear that wage increase with increase in the level of educational attainment for every racial group. Information used is collected from labor statistics in the US.
It is clear that wage increase with an increase in the level of education. The higher the level of education the higher the wage in different racial groups in the US. However, the average weekly wage differs in different racial groups where white Americans receive a higher level compared to Asians, African Americans and Hispanic. Regardless of education attainment and position in the workplace, white American always receive significantly higher wage due to stereotype attached to discriminated groups.
It is clear that wage increase with an increase in the level of educational attainment for every racial group. Racial discrimination is prevalent in the US irrespective of the level of education among workers.
Altman, Morris. Human agency and material welfare: Revisions in microeconomics and their implications for public policy. Springer Science & Business Media, 2012.
Mankiw, N. G. R. E. G. O. R. Y. Principles of macroeconomics. Cengage Learning, 2014.