Black–White Wage Differentials in a Multiple Sample Selection Bias Model
This paper simultaneously incorporates two sources of selection bias in the black-white wage equations. It demonstrates that the biases due to an individual’s propensity to be in the labor force and the firm’s hiring practices are important in determining the black–white wage differential and failure to account for both biases will result in inaccurate estimation of the black–white wage differential. We found that adjusting for double selection bias in the wage equation, the black–white female wage gap is 26% larger than the black–white male wage gap, and 12.1% larger when we adjust for a single selection bias. The results seem to suggest that at the macro level, the enforcement of policies related to racial issues in the labor market will likely lead to a reduction in the black–white wage gap. Copyright International Atlantic Economic Society 2009
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Volume (Year): 37 (2009)
Issue (Month): 1 (March)
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- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
- Pesaran, M H & Smith, R P & Yeo, J S, 1985. "Testing for Structural Stability and Predictive Failure: A Review," The Manchester School of Economic & Social Studies, University of Manchester, vol. 53(3), pages 280-95, September.
- Schiller, Bradley R & Weiss, Randall D, 1980. "Pensions and Wages: A Test for Equalizing Differences," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 529-38, November.
- Elaine Sorensen, 1989. "Measuring the Pay Disparity between Typically Female Occupations and other Jobs: A Bivariate Selectivity Approach," ILR Review, Cornell University, ILR School, vol. 42(4), pages 624-639, July.
- John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
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