The determinants of perceived underpayment: The role of racial comparisons

Using a sample of young employed physicians, the determinants of perceived underpayment are examined for both white and minority workers. The examinat ion confirms the importance of earnings comparisons within racial groups bu t also finds a substantial role for comparisons between racial groups. Work ers apparently perceive racial earnings differences (as measured by economi sts) and build them into an assessment of the fairness of their labor marke t treatment. This finding emerges for both whites and minorities and occurs in a sample in which the pattern of earnings indicates a modest minority e arnings premium.