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Person or Place? Parametric and semiparametric estimates of intrametropolitan earnings variation

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  • J. B. Engberg
  • T. Kim
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    Abstract

    Some scholars have attributed earnings differences among locations to labor market conditions ("place effects") whereas others have focused on the skill level of residents ("person effects"). We estimate a variety of selection models in an effort to detect differences in labor market conditions while controlling for differences in skill levels. We maintain the assumption that there are no barriers to mobility within a metropolitan area for highly educated white men, which implies that intra-urban differences for this group reflect sorting by skill and earnings rather than real wage differences for equally productive workers. This prediction allows us to reject several conventional parametric selection models. We estimate a semiparametric selection model that yields strong evidence that, for less educated white men, the apparent suburban earnings premium is due to sorting rather than labor market differences.

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    Bibliographic Info

    Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1089-96.

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    Handle: RePEc:wop:wispod:1089-96

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    1. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
    2. O'Regan, Katherine M. & Quigley, John M., 1996. "Spatial Effects upon Unemployment Outcomes: The Case of New Jersey Teenagers," Berkeley Program on Housing and Urban Policy, Working Paper Series qt5cn8m94b, Berkeley Program on Housing and Urban Policy.
    3. Thomas Mroz, . "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," University of Chicago - Population Research Center 84-8, Chicago - Population Research Center.
    4. Hardle, W., 1992. "Applied Nonparametric Methods," Discussion Paper 1992-6, Tilburg University, Center for Economic Research.
    5. James J. Heckman, 1989. "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," NBER Working Papers 2861, National Bureau of Economic Research, Inc.
    6. repec:att:wimass:9217 is not listed on IDEAS
    7. Ihlanfeldt, Keith R & Sjoquist, David L, 1990. "Job Accessibility and Racial Differences in Youth Employment Rates," American Economic Review, American Economic Association, vol. 80(1), pages 267-76, March.
    8. Ahn, Hyungtaik & Powell, James L., 1993. "Semiparametric estimation of censored selection models with a nonparametric selection mechanism," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 3-29, July.
    9. Robinson, Chris, 1989. "The Joint Determination of Union Status and Union Wage Effects: Some Tests of Alternative Models," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 639-67, June.
    10. Manski, C.F. & Sandefur, G.D. & Mclanahan, S. & Powers, D., 1990. "Alternative Estimates Of The Effect Of Family Stucture During Adolescence On Hight School Graduation," Working papers 90-31, Wisconsin Madison - Social Systems.
    11. Borjas, George J, 1995. "Ethnicity, Neighborhoods, and Human-Capital Externalities," American Economic Review, American Economic Association, vol. 85(3), pages 365-90, June.
    12. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
    13. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
    14. Case, A.C. & Katz, L.F., 1991. "The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths," Harvard Institute of Economic Research Working Papers 1555, Harvard - Institute of Economic Research.
    15. Sanders Korenman & David Neumark, 1991. "Does Marriage Really Make Men More Productive?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 282-307.
    16. Ihlanfeldt, Keith R., 1992. "Intraurban wage gradients: Evidence by race, gender, occupational class, and sector," Journal of Urban Economics, Elsevier, vol. 32(1), pages 70-91, July.
    17. Oliver LINTON, . "Applied nonparametric methods," Statistic und Oekonometrie 9312, Humboldt Universitaet Berlin.
    18. repec:att:wimass:9001 is not listed on IDEAS
    19. McMillan Daniel P., 1993. "Can Blacks Earn More in the Suburbs? Racial Differences in Intra-metropolitan Earnings Variation," Journal of Urban Economics, Elsevier, vol. 33(2), pages 135-150, March.
    20. Joshua D. Angrist, 1995. "Conditioning on the Probability of Selection to Control Selection Bias," NBER Technical Working Papers 0181, National Bureau of Economic Research, Inc.
    21. Straszheim, Mahlon R., 1980. "Discrimination and the spatial characteristics of the urban labor market for black workers," Journal of Urban Economics, Elsevier, vol. 7(1), pages 119-140, January.
    22. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-49, September.
    23. Newey, Whitney K & Powell, James L & Walker, James R, 1990. "Semiparametric Estimation of Selection Models: Some Empirical Results," American Economic Review, American Economic Association, vol. 80(2), pages 324-28, May.
    24. Daniel, K., 1991. "Does Marriage Make Men More Productive?," University of Chicago - Economics Research Center 92-2, Chicago - Economics Research Center.
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