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Wage Equations with Unreported Earnings: A Methodological Reassessment for the Case of Mexico

Author

Listed:
  • Robert Duval Hernandez

    (Open University of Cyprus)

Abstract

This paper estimates Mincerian wage equations using various methods to address the nonresponse in earnings in the Encuesta Nacional de Ocupación y Empleo (ENOE) survey. Specifically, it compares results obtained from selection models, hot-deck imputation methods, and models without any correction for nonresponse, employing both linear and quantile regressions. Its main contribution is to demonstrate how selection models can be applied to this context and to propose a variable that can be used as an exclusion restriction in such models. Our findings indicate that different methods for adjusting wage nonresponse yield similar estimates when the Mincerian equation is estimated at the conditional mean or median. However, these methods diverge when analyzing the tails of the conditional wage distribution, which may help explain discrepancies found in previous studies regarding estimates of labor poverty and wage inequality when accounting for wage nonresponse.

Suggested Citation

  • Robert Duval Hernandez, 2026. "Wage Equations with Unreported Earnings: A Methodological Reassessment for the Case of Mexico," Sobre México. Revista de Economía, Sobre México. Temas en economía, vol. 1(13), pages 35-66.
    • Handle: RePEc:smx:journl:13:35:66
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    File URL: https://sobremexico-revista.ibero.mx/index.php/Revista_Sobre_Mexico/article/view/187
    File Function: First version, 2026
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    More about this item

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D10 - Microeconomics - - Household Behavior - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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