CeDEx workshop - Thorsten Chmura (University of Nottingham)

Wage Discrimination - Gift Exchange with Migrant Workers and Students in China

Abstract: In this experiment we investigate the determinants of wage discrimination. Therefore, we conducted two gift-exchange experiments in Shanghai and Ningbo (both China) involving students and migrant workers. Students act in the role of employers and decide about the wage of the migrant workers, while the migrant workers choose their effort level given the actual wage. The employers can condition the wages only on the workers' origin. The workers' home province is the only criteria to differentiate between the migrant workers.We observe a high variance in wages across provinces. Combining our lab results with real world data, we can investigate the determinants of wage discrimination. In our setting wages are positively influenced by the economic power of the workers' home provinces, and negatively influenced by the geographical distance between the employers' and workers' home provinces and the ethnical heterogeneity in workers' provinces. The same pattern is observed within a pure student sample.