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Revisiting Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem

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  • Yun, Myeong-Su

    ()
    (Tulane University)

Abstract

We propose a measure of the industrial gender wage gap which is free from an identification problem by using inter-industry wage differentials, or industrial wage premia. We draw on a recent literature showing that a normalized regression equation can be used to resolve the identification problem in detailed Oaxaca decompositions of wage differentials. By identifying the constant and the coefficients of dummy variables, including the reference category, the normalized equation can resolve the two key identification problems that arise in studying wage gaps: one in detailed Oaxaca decompositions; the other measuring industrial gender wage gaps.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2427.

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Length: 13 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2427

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Keywords: industrial wage differentials; invariance; identification; normalized regression;

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  1. William C. Horrace, 2002. "On the Ranking Uncertainty of Labor Market Wage Gaps," Econometrics 0206003, EconWPA.
  2. 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.
  3. Javier Gardeazabal & Aratza Ugidos, . "More on identification in detailed wage decompositions," Studies on the Spanish Economy 140, FEDEA.
  4. John P. Haisken-DeNew & Christoph M. Schmidt, . "Inter-Industry and Inter-Region Differentials: Mechanics and Interpretation," Working Papers 9504, SELAPO Center for Human Resources.
  5. Judith Fields & Edward N. Wolff, 1995. "Interindustry wage differentials and the gender wage gap," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(1), pages 105-120, October.
  6. Greene, William H & Seaks, Terry G, 1991. "The Restricted Least Squares Estimator: A Pedagogical Note," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 563-67, August.
  7. William C. Horrace & Ronald L. Oaxaca, 2001. "Inter-industry wage differentials and the gender wage gap: An identification problem," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(3), pages 611-618, April.
  8. Suits, Daniel B, 1984. "Dummy Variables: Mechanics v. Interpretation," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 177-80, February.
  9. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
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Cited by:
  1. Arvate, Paulo Roberto & Pereira, Carlos, 2010. "Should voters be afraid of hard budget constraint legislation? fiscal responsibility law in brazilian municipalities," Textos para discussão 232, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).

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