Limitations Of Human Capital Theory In Pay Equity Analyses

Law360 (July 2, 2018, 11:21 AM EDT) -- To weigh in on this debate, recently, in Office of Federal Contract Compliance Programs audits and litigation, plaintiff statistical experts have applied a human capital theory[1] approach when evaluating compensation disparities. According to their arguments, employer or institutional characteristics (e.g. job title) are often tainted by discrimination, and their removal can be justified via the human capital theory, which notes that productivity, and inevitably wages, are the result of employee choices and characteristics. Given this perspective, the current article (1) describes the human capital theory and some of its potential limitations, (2) identifies the extent to which it aligns with existing...

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