IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/1915.html
   My bibliography  Save this paper

Estimating Labour Market Discrimination with Selectivity Corrected Wage Equations: Methodological Considerations and an Illustration from Israel

Author

Listed:
  • Neuman, Shoshana
  • Oaxaca, Ronald L

Abstract

This paper presents a modified and improved methodology for the decomposition of wage differentials between two groups of workers into an endowment component and a discrimination component. The standard decomposition technique does not take into account different probabilities of entering the profession under discussion. To incorporate this type of segregation into the wage differential decompositions, two statistical methodologies are merged: the Oaxaca methodology and the Heckman selectivity bias correction procedure. Using information derived from the entrance equations, the decomposition procedure is then modified, in order to take into account the contribution of segregation to the endowments and the discrimination components. It appears that there is more than one way to do it. The proposed methodology is applied to the analysis of wages of professionals in the Israeli labour market. Comparisons are made between the two genders and between Westerners and Easterners. Our results show that discrimination plays a more important role in explaining gender wage differentials than in explaining ethnic wage gaps and that selectivity corrected decompositions are quite capable of yielding very different conclusions than those based on the standard decompositions.

Suggested Citation

  • Neuman, Shoshana & Oaxaca, Ronald L, 1998. "Estimating Labour Market Discrimination with Selectivity Corrected Wage Equations: Methodological Considerations and an Illustration from Israel," CEPR Discussion Papers 1915, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1915
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1915
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. McAleese, Dermot & McDonald, Donogh, 1978. "Employment Growth and the Development of Linkages in Foreign-Owned and Domestic Manufacturing Enterprises," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(4), pages 321-339, November.
    2. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    3. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-149, January.
    4. Bayoumi, Tamim & Coe, David T. & Helpman, Elhanan, 1999. "R&D spillovers and global growth," Journal of International Economics, Elsevier, vol. 47(2), pages 399-428, April.
    5. Alwyn Young, 1992. "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore," NBER Chapters,in: NBER Macroeconomics Annual 1992, Volume 7, pages 13-64 National Bureau of Economic Research, Inc.
    6. Dieter Schumacher, 1995. "Impact on German Trade of Increased Division of Labour with Eastern Europe," Discussion Papers of DIW Berlin 116, DIW Berlin, German Institute for Economic Research.
    7. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    8. Huff,W. G., 1997. "The Economic Growth of Singapore," Cambridge Books, Cambridge University Press, number 9780521629447, March.
    9. James Riedel, 1975. "The nature and determinants of export-oriented direct foreign investment in a developing country: A case study of Taiwan," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 111(3), pages 505-528, September.
    10. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    11. Halpern, László, 1994. "Comparative Advantage and Likely Trade Pattern of the CEECs," CEPR Discussion Papers 1003, C.E.P.R. Discussion Papers.
    12. Gual, Jordi & Martín, Carmela, 1994. "Trade and Foreign Direct Investment with Central and Eastern Europe: Its Impact on Spain," CEPR Discussion Papers 1006, C.E.P.R. Discussion Papers.
    13. Edwin Mansfield & Anthony Romeo, 1980. "Technology Transfer to Overseas Subsidiaries by U. S.-Based Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 95(4), pages 737-750.
    14. Neven, Damien J, 1994. "Trade Liberalization with Eastern Nations. How Sensitive?," CEPR Discussion Papers 1000, C.E.P.R. Discussion Papers.
    15. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April.
    16. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
    17. Kaminski, Bartlomiej & DEC, 1993. "How the market transition affected export performance in the Central European economies," Policy Research Working Paper Series 1179, The World Bank.
    18. Françoise Lemoine, 1996. "Trade Policy and Trade Patterns During Transition: a Comparison Between China and the CEECs," Working Papers 1996-02, CEPII research center.
    19. Djankov, Simeon & Hoekman, Bernard, 1996. "Intra-Industry Trade, Foreign Direct Investment and the Reorientation of East European Exports," CEPR Discussion Papers 1377, C.E.P.R. Discussion Papers.
    20. Fidrmuc, Jarko & Helmenstein, Christian & Huber, Peter, 1995. "Investigating Disaggregate East-West Trade Data: The Reshaping of the International Division of Labor," East European Series 23, Institute for Advanced Studies.
    21. Gabor Hunya & Sandor Richter & Roman Stöllinger, 2010. "Monthly Report No. 1/2010," wiiw Monthly Reports 2010-01, The Vienna Institute for International Economic Studies, wiiw.
    22. Drábek, Zdenek & Smith, Alasdair, 1995. "Trade Performance and Trade Policy in Central and Eastern Europe," CEPR Discussion Papers 1182, C.E.P.R. Discussion Papers.
    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


    Cited by:

    1. Robert Breunig & Sandrine Rospabe, 2005. "Parametric vs. semi-parametric estimation of the male-female wage gap: An application to France," ANU Working Papers in Economics and Econometrics 2005-458, Australian National University, College of Business and Economics, School of Economics.
    2. Anna M. Falzoni & Alessandra Venturini & Claudia Villosio, 2004. "Wage Differentials and International Trade in Italy Using Individual Micro Data 1991-1996," Development Working Papers 190, Centro Studi Luca d'Agliano, University of Milano.
    3. Heinze, Anja & Beninger, Denis & Beblo, Miriam & Laisney, François, 2003. "Measuring Selectivity-Corrected Gender Wage Gaps in the EU," ZEW Discussion Papers 03-74, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Michael Ransom & Ronald L. Oaxaca, 2005. "Intrafirm Mobility and Sex Differences in Pay," ILR Review, Cornell University, ILR School, vol. 58(2), pages 219-237, January.
    5. DeVoretz, Don J. & Pivnenko, Sergiy, 2005. "Self-Selection, Immigrant Public Finance Performance and Canadian Citizenship," IZA Discussion Papers 1463, Institute for the Study of Labor (IZA).
    6. Axel Heitmueller, 2006. "Public-private sector pay differentials in a devolved Scotland," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 295-323, November.
    7. Fernanda Rivas & Máximo Rossi, 2000. "Discriminación salarial en Uruguay (1991-1997)," Documentos de Trabajo (working papers) 0700, Department of Economics - dECON.
    8. Ssebagala, Richard, 2007. "Wage Determination and Gender Discrimination in Uganda," Research Series 150483, Economic Policy Research Centre (EPRC).
    9. Angela Cipollone, 2011. "Education as a Precautionary Asset," Working Papers CELEG 1108, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    10. Jean-Louis Arcand & Béatrice D'hombres, 2004. "Racial discrimination in the Brazilian labour market: wage, employment and segregation effects," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(8), pages 1053-1066.
    11. Yun, Myeong-Su, 1999. "Generalized Selection Bias and The Decomposition of Wage Differentials," IZA Discussion Papers 69, Institute for the Study of Labor (IZA).
    12. Marisa Bucheli & Graciela Sanroman, 2004. "Salarios Femeninos en el Uruguay ¿Existe un Techo de Cristal?," Documentos de Trabajo (working papers) 0504, Department of Economics - dECON.
    13. Sandy, Jonathan & Gonzalez, Arturo & Hilmer, Michael J., 2006. "Alternative paths to college completion: Effect of attending a 2-year school on the probability of completing a 4-year degree," Economics of Education Review, Elsevier, vol. 25(5), pages 463-471, October.
    14. Fernanda Rivas & Máximo Rossi, 2002. "Evolución de las diferencias salariales entre el sector público y el sector privado en Uruguay," Documentos de Trabajo (working papers) 0202, Department of Economics - dECON.
    15. David (David Patrick) Madden, 1999. "Labour Market Discrimination on the Basis of Health: An Application to UK Data," Working Papers 199913, School of Economics, University College Dublin.
    16. Muhammad Asali, 2008. "Wage Differentials in Israel: Endowments, Occupational Segregation, Discrimination, and Selectivity," Working Papers 011-08, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    17. Jaume Garcia Villar & Pedro J. Hernández & Ángel López-Nicolás, 2002. "An investigation of the relationship between job characteristics and the gender wage gap," Economics Working Papers 627, Department of Economics and Business, Universitat Pompeu Fabra.
    18. Marisa Bucheli & Rafael Porzecanski, 2008. "Racial Inequality in the Uruguayan Labor Market:An analysis of wage differentials between Afrodescendants and whites," Documentos de Trabajo (working papers) 1508, Department of Economics - dECON.
    19. Heitmueller, Axel, 2004. "Public-Private Sector Wage Differentials in Scotland: An Endogenous Switching Model," IZA Discussion Papers 992, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Discrimination; Ethnicity; Gender; Human Capital; Selectivity; Wage Differentials;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1915. 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: (). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.