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More on Identification in Detailed Wage Decompositions

Author

Listed:
  • Javier Gardeazabal

    (The University of the Basque Country)

  • Arantza Ugidos

    (The University of the Basque Country)

Abstract

Wage decompositions are often used to decompose wage differentials of two demographic groups into differences in characteristics and differences in returns to those characteristics. The latter part is used as an estimate of the degree of discrimination. A problem with this approach is that the contributions of individual dummy variables to the wage decomposition are not identified. This note proposes a simple solution to the identification problem. The solution is illustrated with an empirical application to Spanish labor market data. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
    • Handle: RePEc:tpr:restat:v:86:y:2004:i:4:p:1034-1036
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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