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More on Identification on Detailed Wage Decompositions

Author

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  • Gardeazabal, Javier
  • Ugidos Olazabal, Arantza

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 later 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.

Suggested Citation

  • Gardeazabal, Javier & Ugidos Olazabal, Arantza, 2002. "More on Identification on Detailed Wage Decompositions," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    • Handle: RePEc:ehu:dfaeii:6733
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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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