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Abstract

Bulgaria's transition to a market economy has coincided with a large increase in wage inequality. Given the emphasis on wage leveling in pre-transition Bulgaria, the rise in wage inequality may be due to managers rewarding more productive workers; or it may be the result of rewarding non-economic characteristics such as gender. Using data from the 1995, nationally representative Bulgaria Integrated Household Survey, I examine whether gender discrimination is an important factor determining the gap in wages between men and women and the extent to which gender discrimination affects wage inequality. I model wage determination with a correction for sample selection as a Type III Tobit and estimate this model with the Honoré et al. (1997) semiparametric estimator. Unlike the classic Heckman correction for sample selection, this estimator is consistent in the presence of heteroscedasticity. I bootstrap to estimate standard errors. Using separate wage regression estimates for men and women, an Oaxaca decomposition indicates that women's wages are 25 percent lower than men's wages and 85 percent of this differential is due to discrimination, or more precisely, due to differences in how men and women are rewarded for the same characteristics.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 30 (2002)
Issue (Month): 2 (June)
Pages: 276-295

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Handle: RePEc:eee:jcecon:v:30:y:2002:i:2:p:276-295

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Web page: http://www.elsevier.com/locate/inca/622864

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Find related papers by JEL classification:

• I2 - Health, Education, and Welfare - - Education
• J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
• C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

References

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1. Ronald Oaxaca, . "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
   
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2. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July.
3. Powell, James L, 1986. "Symmetrically Trimmed Least Squares Estimation for Tobit Models," Econometrica, Econometric Society, vol. 54(6), pages 1435-60, November.
4. Milan Vodopivec & Peter F. Orazem, 2000. "Male-female differences in labor market outcomes during the early transition to market: The cases of Estonia and Slovenia," Journal of Population Economics, Springer, vol. 13(2), pages 283-303.
   
   • Orazem, Peter F. & Vodopivec, Milan, 1999. "Male-female differences in labor market outcomes during the early transition to market : the case of Estonia and Slovenia," Policy Research Working Paper Series 2087, The World Bank.
   • Orazem, Peter & Vodopivec, Milan, 2000. "Male-Female Differences in Labor Market Outcomes During the Early Transition to Market: The Cases of Estonia and Slovenia," Staff General Research Papers 1889, Iowa State University, Department of Economics.
5. Honore, Bo E. & Kyriazidou, Ekaterini & Udry, Christopher, 1997. "Estimation of Type 3 Tobit models using symmetric trimming and pairwise comparisons," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 107-128.
   
   • Bo E. Honore & Ekaterini Kyriazidou & Christopher Udry, . "Estimation of Type 3 Tobit Models using Symmetric Trimming and Pairwise Comparisons," Home Pages _001, Princeton University, Department of Economics.
6. Simon Appleton & John Hoddinott & Pramila Krishnan, 1996. "The gender wage gap in three African countries," CSAE Working Paper Series 1996-07, Centre for the Study of African Economies, University of Oxford.
   
   • Appleton, Simon & Hoddinott, John & Krishnan, Pramila, 1999. "The Gender Wage Gap in Three African Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 289-312, January.
7. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
   
   • Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
8. Nelson, Forrest D, 1981. "A Test for Misspecification in the Censored Normal Model," Econometrica, Econometric Society, vol. 49(5), pages 1317-29, September.
9. Christopher Ferrall, 1998. "Routines to maximize a function," Stata Technical Bulletin, StataCorp LP, vol. 7(38).
10. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
11. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, vol. 82(2), pages 533-38, May.
12. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers 227, Board of Governors of the Federal Reserve System (U.S.).
    
    • David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
13. Powell, James L., 1984. "Least absolute deviations estimation for the censored regression model," Journal of Econometrics, Elsevier, vol. 25(3), pages 303-325, July.
14. Arabmazar, Abbas & Schmidt, Peter, 1981. "Further evidence on the robustness of the Tobit estimator to heteroskedasticity," Journal of Econometrics, Elsevier, vol. 17(2), pages 253-258, November.
15. Hurd, Michael, 1979. "Estimation in truncated samples when there is heteroscedasticity," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 247-258.
16. Pagan, Adrian & Vella, Frank, 1989. "Diagnostic Tests for Models Based on Individual Data: A Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S29-59, Supplemen.

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