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Selectivity and the gender wage gap decomposition in the presence of a joint decision process


  • Schafgans, Marcia M. A.
  • Stelcnery, Morton


In this paper we revisit the gender decomposition of wages in the presence of selection bias. We show that when labor market participation decisions of couples are not independent, the sample selection corrections used in the literature have been incomplete (incorrect). We derive the appropriate sample selection corrections, based on a reduced form model for the joint participation decisions of both spouses. The influence that husbands’ participation decision has on the female participation decision also highlights the importance of using data on both spouses for the analysis of the gender wage gap. Taking account of these issues might influence the outcome of the decomposition analysis and affect the evidence of discrimination. We analyze its potential impact by analyzing the gender earnings differential using Canadian census data.

Suggested Citation

  • Schafgans, Marcia M. A. & Stelcnery, Morton, 2006. "Selectivity and the gender wage gap decomposition in the presence of a joint decision process," LSE Research Online Documents on Economics 6809, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:6809

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    References listed on IDEAS

    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
    2. Louis N. Christofides & Robert Swidinsky, 1994. "Wage Determination by Gender and Visible Minority Status: Evidence from the 1989 LMAS," Canadian Public Policy, University of Toronto Press, vol. 20(1), pages 34-51, March.
    3. Kostas G. Mavromaras & Helmut Rudolph, 1997. "Wage Discrimination in the Reemployment Process," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 812-860.
    4. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    More about this item


    sample selection model; gender wage differences; Oaxaca wage decomposition; ‘discrimination’;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models


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