Heywood, John S., and Patrick L. O'Halloran. 2005. "Racial Earnings Differentials and Performance Pay." Journal of Human Resources 40(2): 435-452.

This paper presents an information model in which workers receiving output-based pay experience less racial earnings discrimination than those receiving time rates and supervisory evaluations. Tests using the National Longitudinal Survey of Youth reveal no racial wage differential among male workers paid output-based pay while confirming a significant differential among those paid time rates. In addition, the racial wage differential among those receiving bonus pay, usually based on supervisory evaluations, tends to be larger than for those not receiving such bonuses.

John S. Heywood is a professor of economics and Director of the Graduate Program in Human Resources and Labor Relations at the University of Wisconsin-Milwaukee. Patrick L. O’Halloran is an assistant professor of economics at Monmouth University.