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Wage Differentials, Discrimination And Inequality: A Cautionary Note On The Juhn, Murphy And Pierce Decomposition Method

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  • Myeong-Su Yun

Abstract

This paper shows how difficult it is to study the roles of discrimination and unobserved skills when studying changes in racial and gender wage gaps over time by examining merits and shortcomings of a popular decomposition method by Juhn, Murphy and Pierce (1991). The JMP method shows that wage dispersion can offer a compelling explanation of the wage gap. However, JMP have to rely on a few strong assumptions in order to derive their decomposition equation which introduces wage inequality as the price of unobserved skills (the standard deviation of the residuals) into their decomposition equation.

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Bibliographic Info

Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 56 (2009)
Issue (Month): 1 (02)
Pages: 114-122

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Handle: RePEc:bla:scotjp:v:56:y:2009:i:1:p:114-122

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Cited by:
  1. Solomon W. Polachek & Jun Xiang, 2009. "The Gender Pay Gap across Countries: A Human Capital Approach," SOEPpapers on Multidisciplinary Panel Data Research 227, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Essama-Nssah, B., 2012. "Identification of sources of variation in poverty outcomes," Policy Research Working Paper Series 5954, The World Bank.
  3. Luis Armando Galvis, 2010. "Diferencias salariales por género y región en Colombia: una aproximación con regresión por cuantiles," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL 007428, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
  4. Cho, Donghun & Cho, Joonmo & Song, Bohwa, 2010. "An empirical analysis of the gender earnings gap between the public and private sectors in Korea: A comparative study with the US," Journal of the Japanese and International Economies, Elsevier, vol. 24(3), pages 441-456, September.

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