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Identifying and Correcting Publication Selection Bias in the Efficiency-Wage Literature: Heckman Meta-Regression

Publication selection bias represents one of the most serious challenges to the integrity of empirical economics. We develop Heckman regression methods to solve this potentially persistent problem and apply these meta-regression methods to seventy five empirical estimates from the efficiency-wage literature. Although many researchers find mixed or ambiguous support for the efficiency wage hypothesis (EWH), our meta-analyses give unambiguous confirmation of the EWH. After correcting for publication selection bias, we estimate the wage elasticity of output to be 0.32, much smaller than what the neoclassical version of the efficiency wage hypothesis demands. This wage elasticity also depends significantly upon whether the researchers’ model accounts for the simultaneity of wages and productivity and whether their empirical model includes capital. In both cases, the ‘correct’ specification increases the magnitude of the wage elasticity of production, thereby further corroborating the EWH.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2007_11eco.pdf
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Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2007_11.

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Length: 32 pages
Date of creation: 21 Oct 2007
Date of revision:
Handle: RePEc:dkn:econwp:eco_2007_11
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Web page: http://www.deakin.edu.au/buslaw/aef/index.php

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  7. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
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  11. Chris Doucouliagos, 2005. "Publication Bias in the Economic Freedom and Economic Growth Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 367-387, 07.
  12. Peter Nijkamp & Jacques Poot, 2002. "The Last Word on the Wage Curve?," Tinbergen Institute Discussion Papers 02-029/3, Tinbergen Institute, revised 13 Mar 2003.
  13. T.D. Stanley, 2006. "Meta-Regression Methods for Detecting and Estimating Empirical Effects in the Presence of Publication Selection," Economics Series 2006_20, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  14. Ashenfelter, O. & Harmon, C. & Oosterbeek, H., 1999. "A Review of Estimates of the Schooling/ Earnings Relationship, with tests for Publication Bias," Papers 99/20, College Dublin, Department of Political Economy-.
  15. Laroche, P., 2000. "What do Unions do to Productivity? A Meta-Analysis," Papers 2000-5, Groupe de recherche en économie financière et en gestion des entreprises, Universite Nancy 2.
  16. T.D. Stanley & Stephen B. Jarrell, 1998. "Gender Wage Discrimination Bias? A Meta-Regression Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 947-973.
  17. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May.
  18. T. D. Stanley, 2005. "Beyond Publication Bias," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 309-345, 07.
  19. J. Bradford De Long & Kevin Lang, . "Are All Economic Hypotheses False?," J. Bradford De Long's Working Papers _117, University of California at Berkeley, Economics Department.
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  21. Chris Doucouliagos & Patrice Laroche, 2007. "Unions and Profitability: A Meta-Analysis," Economics Series 2007_01, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
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