This paper presents a modified and improved methodology for the decomposition of wage differentials between two groups of workers into an endowment component and a discrimination component. The standard decomposition technique does not take into account different probabilities of entering the profession under discussion. To incorporate this type of segregation into the wage differential decompositions, two statistical methodologies are merged: the Oaxaca methodology and the Heckman selectivity bias correction procedure. Using information derived from the entrance equations, the decomposition procedure is then modified, in order to take into account the contribution of segregation to the endowments and the discrimination components. It appears that there is more than one way to do it. The proposed methodology is applied to the analysis of wages of professionals in the Israeli labour market. Comparisons are made between the two genders and between Westerners and Easterners. Our results show that discrimination plays a more important role in explaining gender wage differentials than in explaining ethnic wage gaps and that selectivity corrected decompositions are quite capable of yielding very different conclusions than those based on the standard decompositions.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
1915.
Find related papers by JEL classification: J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)