Employer Attitudes, the Marginal Employer, and the Ethnic Wage Gap

Abstract

In most EU countries, ethnic minorities have lower wages than does the ethnic majority. To what extent these wage gaps are the result of prejudice toward ethnic minority workers is virtually unknown. The authors examine the role that prejudice plays in the creation of the ethnic wage gap in one of Europe’s most egalitarian countries, Sweden. The analysis takes into account the important distinction between average employer attitudes and the attitude of the marginal employer (the attitude of the most prejudiced employer hiring the ethnic minority). Results confirm that the attitudes of the marginal employer—but not those of the average employer—are important for explaining the ethnic wage gap.