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Estimation of Wage Gains and Welfare Gains from Self-Selection Models

Author

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  • Björklund, Anders

    (Research Institute of Industrial Economics (IFN))

Abstract

In this paper we consider the basic self-selection model for the effects of education, training, unions, and other activities on wages. We show that past models have ignored "heterogeneity of rewards" to the activity--i.e., differences across individuals in the rate of return to the activity--as a source of selection bias. We model such heterogeneity, show how its presence can be tested, and draw out its implications for the wage and welfare gains to the activity. An empirical application provides strong support for such heterogeneity.

Suggested Citation

  • Björklund, Anders, 1983. "Estimation of Wage Gains and Welfare Gains from Self-Selection Models," Working Paper Series 105, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0105
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    Cited by:

    1. Moler-Zapata, S.; & Grieve, R.; & Basu, A.; & O'Neill, S.;, 2022. "How does a local Instrumental Variable Method perform across settings with instruments of differing strengths? A simulation study and an evaluation of emergency surgery," Health, Econometrics and Data Group (HEDG) Working Papers 22/18, HEDG, c/o Department of Economics, University of York.
    2. Lorenzo Guarcello & Fabrizia Mealli & Furio Rosati, 2010. "Household vulnerability and child labor: the effect of shocks, credit rationing, and insurance," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 169-198, January.
    3. Taye Mengistae, 1998. "Wage rates and job queues: does the public sector overpay in Ethiopia?," CSAE Working Paper Series 1998-20, Centre for the Study of African Economies, University of Oxford.
    4. Silvia Moler‐Zapata & Richard Grieve & Anirban Basu & Stephen O’Neill, 2023. "How does a local instrumental variable method perform across settings with instruments of differing strengths? A simulation study and an evaluation of emergency surgery," Health Economics, John Wiley & Sons, Ltd., vol. 32(9), pages 2113-2126, September.

    More about this item

    Keywords

    Education; Unions; Wage;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I20 - Health, Education, and Welfare - - Education - - - General

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