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

  • Marcia M. A. Schafgans
  • Morton Stelcnery
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    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.

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    File URL: http://eprints.lse.ac.uk/6809/
    File Function: Open access version.
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    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 6809.

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    Length: 36 pages
    Date of creation: Dec 2006
    Date of revision:
    Handle: RePEc:ehl:lserod:6809
    Contact details of provider: Postal: LSE Library Portugal Street London, WC2A 2HD, U.K.
    Phone: +44 (020) 7405 7686
    Web page: http://www.lse.ac.uk/

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    1. Christofides, L.N. & Swidinsky, R., 1992. "Wage Determination by Gender and Visible Minority Stutus : Evidence from the 1989 LMAS," Working Papers 1992-18, University of Guelph, Department of Economics and Finance.
    2. 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.
    3. 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.
    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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