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On the Ranking Uncertainty of Labor Market Wage Gaps


  • William C. Horrace

    (University of Arizona)


This paper uses multiple comparison methods to perform inference on labor market wage gap estimates from a regression model of wage determination. The regression decomposes a sample of workers' wages into a human capital component and a gender specific component; the gender component is called the gender differential or wage gap and is sometimes interpreted as a measure of sexual discrimination. Using data on fourteen industry classifications (e.g. retail sales, agriculture), a new relative estimator of the wage gap is calculated for each industry. The industries are then ranked based on the magnitude of these estimators, and inference experiments are performed using "multiple comparisons with the best" and "multiple comparisons with a control". The inference indicates that differences in gender discrimination across industry classifications is statistically insignificant at the 95% confidence level and that previous studies which have failed to perform inference on gender wage gap order statistics may be misleading.

Suggested Citation

  • William C. Horrace, 2002. "On the Ranking Uncertainty of Labor Market Wage Gaps," Econometrics 0206003, EconWPA.
  • Handle: RePEc:wpa:wuwpem:0206003
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP; pages: 17; figures: included. Multiple comparison inference techniques applied to labor amrket wage gap estimation

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    References listed on IDEAS

    1. Rosenthal, Robert W, 1989. "A Bounded-Rationality Approach to the Study of Noncooperative Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 18(3), pages 273-291.
    2. Janet Currie & Jonathan Gruber, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 431-466.
    3. Amemiya, Takeshi, 1977. "Some Theorems in the Linear Probability Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 645-650, October.
    4. James J. Heckman & James M. Snyder, Jr., 1996. "Linear Probability Models of the Demand for Attributes with an Empirical Application to Estimating the Preferences of Legislators," NBER Working Papers 5785, National Bureau of Economic Research, Inc.
    5. Robert W. Fairlie & William A. Sundstrom, 1999. "The Emergence, Persistence, and Recent Widening of the Racial Unemployment Gap," ILR Review, Cornell University, ILR School, vol. 52(2), pages 252-270, January.
    6. Lukashin, Youri Pavlovich, 2000. "Econometric Analysis of Managers' Judgements on the Determinants of the Financial Situation in Russia," Economic Change and Restructuring, Springer, vol. 33(1-2), pages 85-101.
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    Cited by:

    1. Beyza Ural & William Horrace & Jin Hwa Jung, 2009. "Inter-industry gender wage gaps by knowledge intensity: discrimination and technology in Korea," Applied Economics, Taylor & Francis Journals, vol. 41(11), pages 1437-1452.
    2. Yun, Myeong-Su, 2006. "Revisiting Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem," IZA Discussion Papers 2427, Institute for the Study of Labor (IZA).
    3. William Horrace & Joseph Marchand & Timothy Smeeding, 2008. "Ranking inequality: Applications of multivariate subset selection," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(1), pages 5-32, March.
    4. Lin, Eric S., 2010. "Gender wage gaps by college major in Taiwan: Empirical evidence from the 1997-2003 Manpower Utilization Survey," Economics of Education Review, Elsevier, vol. 29(1), pages 156-164, February.
    5. Yun, Myeong-Su & Lin, Eric S., 2015. "An Alternative Estimator for Industrial Gender Wage Gaps: A Normalized Regression Approach," IZA Discussion Papers 9381, Institute for the Study of Labor (IZA).
    6. William Horrace & Christopher Parmeter, 2016. "Accounting for Multiplicity in Inference on Economics Journal Rankings," Working Papers 2016-08, University of Miami, Department of Economics.
    7. William C. Horrace, 2002. "Selection Procedures for Order Statistics in Empirical Economic Studies," Econometrics 0206005, EconWPA.

    More about this item


    Labor economics; discrimination; wage differentials; multiple comparisons with the best;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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