Advanced Search
MyIDEAS: Login

Selection Bias and the Decomposition of Wage Differentials

Contents:

Author Info

  • Myeong-Su Yun

    ()
    (University of Western Ontario)

Abstract

The major contribution of this paper is finding a new and general approach to decomposing log-wage differentials when selection effects are present. We divide the observed log-wage differentials between two groups into 1) differentials in predicted log-wages computed using observed individual characteristics and consistent coefficients while assuming both groups' stochastic component (unobserved individual characteristics) of log-wages to have the same mean zero, and 2) differentials caused by differences in unobserved individual characteristics (selection effects). We compute the average of the selection effects by taking sample average of the residuals of log-wages (observed log-wages minus predicted log-wages) without relying on the analytical formula(e) for computing the selection effects. Blinder-Oaxaca type decomposition can be applied for the differentials in predicted log-wages in order to find the effects of differences in observed individual characteristics and the effects of differences in coefficients. We call this approach a ``generalized selection bias (GSB) approach.'' Our approach can be implemented with any kind estimation method as long as we can obtain consistent coefficients for the log-wage equation. We illustrate our approach by applying it to the racial wage differentials among women using data from the current population survey.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://snde.rutgers.edu/Rutgers/wp/1999-11.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 199911.

as in new window
Length:
Date of creation: 11 Jul 2000
Date of revision:
Handle: RePEc:rut:rutres:199911

Contact details of provider:
Postal: New Jersey Hall - 75 Hamilton Street, New Brunswick, NJ 08901-1248
Phone: (732) 932-7482
Fax: (732) 932-7416
Web page: http://snde.rutgers.edu/Rutgers/wp/rutgers-wplist.html
More information through EDIRC

Related research

Keywords: decomposition analysis of wage differentials; discrimination; Heckman's two-step method; maximum likelihood estimation; selection bias;

Find related papers by JEL classification:

References

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.:
as in new window
  1. Blundell, Richard & Ham, John & Meghir, Costas, 1987. "Unemployment and Female Labour Supply," Economic Journal, Royal Economic Society, vol. 97(388a), pages 44-64, Supplemen.
  2. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692 Elsevier.
  3. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Sarnikar, Supriya & Sorensen, Todd A. & Oaxaca, Ronald L., 2007. "Do You Receive a Lighter Prison Sentence Because You Are a Woman? An Economic Analysis of Federal Criminal Sentencing Guidelines," IZA Discussion Papers 2870, Institute for the Study of Labor (IZA).
  2. Usamah Fayez Al-Farhan, 2010. "Changes in the Gender Wage Gap in Germany during a Period of Rising Wage Inequality 1999-2006: Was it Discrimination in the Returns to Human Capital?," SOEPpapers on Multidisciplinary Panel Data Research 293, DIW Berlin, The German Socio-Economic Panel (SOEP).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rut:rutres:199911. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.