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Consistent Estimation Using Data From More Than One Sample

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  • William T. Dickens
  • Brian A. Ross

Abstract

This paper considers the estimation of linear models when group average data from more than one sample is used. Conditions under which OL8 coefficient estimates are consistent are identified. The standard OL8 covariance estimate is shown to be inconsistent and a consistent estimator is proposed. Finally, since the conditions under which OL8 is consistent are quite restrictive, several estimators which are consistent in many cases where OL8 is not are developed. The large sample distribution properties and an estimator for the asymptotic covariance matrix for the most general of these alternative estimators is also presented. One important application of these findings is to estimating compensating wage differences. Past authors, beginning with Thaler and Rosen (1976) have argued that finer classification schemes would reduce errors-in-variable bias. The analysis presented here suggests that the opposite is true if finer classification results in fewer observations per classification. This could explain why authors using the broader (industry) classification schemes have found larger compensating differences and suggests that these estimates may be closer to the true values.

Suggested Citation

  • William T. Dickens & Brian A. Ross, 1984. "Consistent Estimation Using Data From More Than One Sample," NBER Technical Working Papers 0033, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberte:0033 Note: LS
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    1. Craig A. Olson, 1981. "An Analysis of Wage Differentials Received by Workers on Dangerous Jobs," Journal of Human Resources, University of Wisconsin Press, pages 167-185.
    2. Lucas, Robert E B, 1977. "Hedonic Wage Equations and Psychic Wages in the Returns to Schooling," American Economic Review, American Economic Association, pages 549-558.
    3. Ann P. Bartel, 1982. "Wages, Nonwage Job Characteristics, and Labor Mobility," ILR Review, Cornell University, ILR School, pages 578-589.
    4. Richard Thaler & Sherwin Rosen, 1976. "The Value of Saving a Life: Evidence from the Labor Market," NBER Chapters,in: Household Production and Consumption, pages 265-302 National Bureau of Economic Research, Inc.
    5. Charles Brown, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 94(1), pages 113-134.
    6. Robert S. Smith, 1979. "Compensating Wage Differentials and Public Policy: A Review," ILR Review, Cornell University, ILR School, pages 339-352.
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    Cited by:

    1. Barry T. Hirsch & David A. Macpherson, 2004. "Wages, Sorting on Skill, and the Racial Composition of Jobs," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 189-210, January.
    2. Stepan Jurajda & Heike Harmgart, 2002. "Sex Segregation and Wage Gaps in East and West Germany," CERGE-EI Working Papers wp202, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Jurajda, Stepan & Harmgart, Heike, 2007. "When do female occupations pay more?," Journal of Comparative Economics, Elsevier, pages 170-187.
    4. Hirsch, Barry T. & Schumacher, Edward J., 1995. "Monopsony power and relative wages in the labor market for nurses," Journal of Health Economics, Elsevier, pages 443-476.
    5. David Neumark & Michael L. Wachter, 1992. "Union Threat Effects and Nonunion Industry Wage Differentials," NBER Working Papers 4046, National Bureau of Economic Research, Inc.
    6. Levine, David I., 1991. "You Get What You Pay For: Tests of Efficency Wage Theories in the United States and Japan," Institute for Research on Labor and Employment, Working Paper Series qt9t02v034, Institute of Industrial Relations, UC Berkeley.
    7. Jurajda, Štepán & Harmgart, Heike, 2004. "When Are ‘Female’ Occupations Paying More?," IZA Discussion Papers 985, Institute for the Study of Labor (IZA).
    8. William T. Dickens, 1990. "Assuming The Can Opener: Hedonic Wage Estimates and the Value of Life," NBER Working Papers 3446, National Bureau of Economic Research, Inc.
    9. B. T. Hirsch & D. A. Macpherson, "undated". "Wages, racial composition, and quality sorting in labor markets," Institute for Research on Poverty Discussion Papers 1038-94, University of Wisconsin Institute for Research on Poverty.
    10. Xiaohong Chen & Han Hong & Denis Nekipelov, 2011. "Nonlinear Models of Measurement Errors," Journal of Economic Literature, American Economic Association, pages 901-937.
    11. Jurajda, Stepan & Harmgart, Heike, 2007. "When do female occupations pay more?," Journal of Comparative Economics, Elsevier, pages 170-187.
    12. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.

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