Do Formal Policies Reduce Inequality? Examining Ethnic Wage Gaps in Organizations

• In Event: 50220 - Section on Organizations, Occupations, and Work Roundtables
  In Refereed Roundtable (60 minute): Table 11: Improving Work and Organizations

Abstract

Organizations play a crucial role in shaping employment disparities between ethnic groups, influencing hiring, wages, and promotions. While the formalization of workplace practices, such as written job descriptions and performance reviews, has been widely adopted by firms to ensure fairness and compliance with civil rights standards, its effectiveness in reducing ethnic wage inequality remains unclear. Prior research has relied heavily on cross-sectional data and methods, limiting causal inferences about the effect of formal workplace policies on ethnic wage inequality. I address this limitation by utilizing longitudinal employer-employee data from Germany (LIAB) to examine whether and how the implementation of formalized workplace policies influences intra-firm ethnic wage gaps with fixed-effects regressions. I also investigate whether the impact of formalization varies based on pre-existing wage inequalities within firms. Findings from this study will provide valuable insights into the effectiveness of formal policies in addressing workplace inequality.

Author

• Hannah Luisa Reitz, University of Mannheim