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Identifying and Correcting Publication Selection Bias in the Efficiency-Wage Literature: Heckman Meta-Regression

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Abstract

Publication selection bias represents one of the most serious challenges to the integrity of empirical economics. We develop Heckman regression methods to solve this potentially persistent problem and apply these meta-regression methods to seventy five empirical estimates from the efficiency-wage literature. Although many researchers find mixed or ambiguous support for the efficiency wage hypothesis (EWH), our meta-analyses give unambiguous confirmation of the EWH. After correcting for publication selection bias, we estimate the wage elasticity of output to be 0.32, much smaller than what the neoclassical version of the efficiency wage hypothesis demands. This wage elasticity also depends significantly upon whether the researchers’ model accounts for the simultaneity of wages and productivity and whether their empirical model includes capital. In both cases, the ‘correct’ specification increases the magnitude of the wage elasticity of production, thereby further corroborating the EWH.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2007_11eco.pdf
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Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2007_11.

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Length: 32 pages
Date of creation: 21 Oct 2007
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Handle: RePEc:dkn:econwp:eco_2007_11

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  1. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 2000. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," NBER Working Papers 7457, National Bureau of Economic Research, Inc.
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  14. T.D. Stanley, 2006. "Meta-Regression Methods for Detecting and Estimating Empirical Effects in the Presence of Publication Selection," Economics Series 2006_20, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  15. Card, David & Krueger, Alan B, 1995. "Time-Series Minimum-Wage Studies: A Meta-analysis," American Economic Review, American Economic Association, vol. 85(2), pages 238-43, May.
  16. Alan Krueger, 1999. "Measuring Labor's Share," NBER Working Papers 7006, National Bureau of Economic Research, Inc.
  17. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  18. repec:fth:prinin:425 is not listed on IDEAS
  19. Laroche, P., 2000. "What do Unions do to Productivity? A Meta-Analysis," Papers 2000-5, Groupe de recherche en économie financière et en gestion des entreprises, Universite Nancy 2.
  20. J. Bradford De Long & Kevin Lang, . "Are All Economic Hypotheses False?," J. Bradford De Long's Working Papers _117, University of California at Berkeley, Economics Department.
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  22. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
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