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

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Author Info
T.D Stanley () (Hendrix College)
Hristos Doucouliagos () (Deakin University)

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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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Publisher Info
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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Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

References listed on IDEAS
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.:

  1. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 1999. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," Working Papers 804, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  2. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2005. "A Meta-Analysis of Beta-Convergence: The Legendary Two-Percent," Tinbergen Institute Discussion Papers 05-001/3, Tinbergen Institute. [Downloadable!]
  3. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  4. Alan Krueger, 1999. "Measuring Labor's Share," Working Papers 792, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  5. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
  8. T. D. Stanley, 2008. "Meta-Regression Methods for Detecting and Estimating Empirical Effects in the Presence of Publication Selection," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 103-127, 02. [Downloadable!] (restricted)
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  9. T. D. Stanley & Stephen B. Jarrell, 2005. "Meta-Regression Analysis: A Quantitative Method of Literature Surveys," Journal of Economic Surveys, Blackwell Publishing, vol. 19(3), pages 299-308, 07. [Downloadable!] (restricted)
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  10. repec:fth:prinin:425 is not listed on IDEAS
  11. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May. [Downloadable!] (restricted)
  12. Chris Doucouliagos, 2005. "Publication Bias in the Economic Freedom and Economic Growth Literature," Journal of Economic Surveys, Blackwell Publishing, vol. 19(3), pages 367-387, 07. [Downloadable!] (restricted)
  13. De Long, J Bradford & Lang, Kevin, 1992. "Are All Economic Hypotheses False?," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1257-72, December. [Downloadable!] (restricted)
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  14. T. D. Stanley, 2005. "Beyond Publication Bias," Journal of Economic Surveys, Blackwell Publishing, vol. 19(3), pages 309-345, 07. [Downloadable!] (restricted)
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(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.)

  1. T.D. Stanley, 2006. "Two-Stage Precision-Effect Estimation and Heckman Meta-Regression for Publication Selection Bias," Economics Series 2006_25, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance. [Downloadable!]
  2. Hristos Doucouliagos & T.D. Stanley, 2008. "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis," Economics Series 2008_14, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance. [Downloadable!]
    Other versions:
  3. T.D. Stanley & Stephen B. Jarrell & Hristos Doucouliagos, 2009. "Could It Be Better to Discard 90% of the Data? A Statistical Paradox," Economics Series 2009_13, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance. [Downloadable!]
  4. Hristos Doucouliagos & T.D. Stanley, 2008. "Theory Competition and Selectivity: Are All Economic Facts Greatly Exaggerated?," Economics Series 2008_06, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance. [Downloadable!]
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