Wage differentials by race and sex: The roles of taste discrimination and labor market information

Using a unique dataset, this article First documents that gaps in starting wages by race and sex persist after accounting for performance on the job. Evidence suggests that simple statistical discrimination, and not just tast e discrimination, is partly responsible for race differences in starting wa ges. But because women's average performance in the sample is higher than m en's, simple statistical discrimination cannot explain the sex gap. In more complex models of statistical discrimination, worse information about a gr oup can lower its average wage. Estimates of the quality of labor market in formation indicate that this may explain women's lower starting wages.