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Research Says Race and Gender Affects Fair Pay Perception

Originally published 4 April 2003

Race and gender have a strong influence on people’s perceptions of how fairly they are paid, according to new research by University of Warwick economics researcher Maureen Paul, to be presented at the Royal Economic Society’s Annual Conference on Tuesday 8 April.

Her analysis of data from the British Social Attitudes Survey reveals that the average non-white employee is more likely than a white employee to believe his pay to be less than he deserves. More surprisingly, compared to a male counterpart, the average female employee is more likely to perceive herself to be fairly remunerated. These findings suggest that simply tackling pay will not eliminate feelings of underpayment since they may be culturally and socially influenced. Considered against the backdrop of evidence that shows a positive relationship between fairness-of-pay perceptions and productivity, the policy implications are important.

The results imply that to increase productivity it may be necessary to do more than undertake policies that target wages. In other words, policies that address cultural misgivings and social concerns must be adopted in conjunction with those that target wages. For example, it may be that non-white employees believe that there is ‘institutionalised’ racism in the labour market. This belief may then lead to a downward bias in their perception of how fairly they are treated where pay is concerned.

In turn, the unfavourable perception of their pay may have a negative effect on their levels of effort, thus leading them to appear less productive than white employees. The result is a somewhat self-fulfilling prophecy. The wrong signal is sent to employers who over time may become prejudiced against non-white staff. Should non-white employees’ confidence be boosted by policies that seek to eliminate ‘institutionalised’ racism, their perception of their pay and their levels of effort can be improved.

Women, on the other hand, may not believe that the labour market is biased against them with regard to pay (despite the widely publicised evidence of pay discrimination against female staff). It is possible that they may think men posses innate skills deserving of a premium. On this count, female employees would not be any less productive than male employees. This could mean that policies designed to increase the pay of women on levels on a par with that of men are misguided. Higher pay may simply lead women to work harder. Perhaps women should be encouraged to align their beliefs with the common empirical finding that they face pay discrimination.

In sum, simply increasing the pay of non-white employees will not stop them from feeling underpaid in comparison with white employees. Instead, policies that target problems such as ‘institutionalised’ racism should also be pursued. There is also little to gain from increasing the pay of women. Indeed, employers may be better off increasing their numbers of female employees.

For further information please contact:

Maureen Paul on 02476-528418

Peter Dunn, Press Officer, University of Warwick
Tel: 024 76 523708 Email:

RES Media Consultant Romesh Vaitilingam 07768-661095

Notes for Editors:
‘A Cross-section Analysis of the Fairness-of-pay Perception of UK Employees’ by Maureen Paul will be presented at the Royal Economic Society’s 2003 Annual Conference at the University of Warwick on Tuesday 8 April. Maureen Paul is in the Department of Economics, University of Warwick, Coventry CV4 7AL (website: