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Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands

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  • Albrecht, James
  • van Vuuren, Aico
  • Vroman, Susan

Abstract

Several recent papers use the quantile regression decomposition method of Machado and Mata [Machado, J.A.F. and Mata, J. (2005). Counterfactual decomposition of changes in wage distributions using quantile regression, Journal of Applied Econometrics, 20, 445-65.] to analyze the gender gap across log wage distributions. In this paper, we prove that this procedure yields consistent and asymptotically normal estimates of the quantiles of the counterfactual distribution that it is designed to simulate. Since employment rates often differ substantially by gender, sample selection is potentially a serious issue for such studies. To address this issue, we extend the Machado-Mata technique to account for selection. We illustrate our approach to adjusting for sample selection by analyzing the gender log wage gap for full-time workers in the Netherlands.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 16 (2009)
Issue (Month): 4 (August)
Pages: 383-396

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Handle: RePEc:eee:labeco:v:16:y:2009:i:4:p:383-396

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Gender Quantile regression Selection;

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References

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  1. Richard Blundell & Amanda Gosling & Hidehiko Ichimura & Costas Meghir, 2006. "Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-420, CIRJE, Faculty of Economics, University of Tokyo.
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