FEAR AND LATHING IN THE MICHIGAN FURNITURE INDUSTRY - EMPLOYEE-BASED DISCRIMINATION A CENTURY AGO

We analyze employee-based discrimination using historical data on work ers attributes From Michigan's furniture industry. The data provide co mpelling evidence of employee-based discrimination in the form of a co mpensating wage differential. A one percentage point decrease in the s hare of the work force from the worker's own ethnic group increased th e wage about 0.1 percent. This response was larger in small firms, in small towns, and among certain ethnic groups. Protestants were general ly paid move to work with Catholics. The additional labor costs genera ted by employee-based discrimination were probably offset by several b enefits which rendered complete segregation unnecessary.