The Effects of Gender and Race on Salary Growth: The Role of Occupational Structure in a Service Sector Firm

Using data from a financial services firm, the determinants of salary growth are estimated in a two-stage model with special attention given to the roles of gender and race. While the analysis reveals no overt bias in salary growth decisions, there is evidence of institutional bias within one branch of the firm. In that branch the proportion of white females in an occupation is negatively related to salary growth for all but white males. Additional analysis suggests that rules governing promotion and salary growth differ for white males, white females, and minority workers within this branch. Interestingly, the same analysis of a second branch leads to quite different conclusions.