The Distribution of Wages: A Non-parametic Decomposition
This paper presents a non-parametric procedure to analyze the effects of different factors on observed movements in any distribution. These effects are estimated by applying kernel density methods to weighted samples in order to obtain counterfactual distributions. The advantage of this approach is that it provides a direct means of investigating if these factors have an impact and where in the density they do so, and it offers a new decomposition method of within and between group components. The approach to the decomposition analysis applied in this paper differs from the classical one of additively decomposable inequality indexes. If the purpose of the analysis is to understand what determined the variation in relative inequality, there is no doubt that the decomposition of the indexes belonging to the generalized entropy family is the best method. If, instead, the aim is to monitor what factors modified the entire distribution, where precisely on the distribution these factors had an effect, and what determined the variation in the level of polarization observed, then that method is useless. The non-parametric method proposed is the one to use, but with one caveat: All the results assume that there are no general equilibrium effects. The paper contains summary statistics of the observed movements and of distance and divergence among the estimated and counterfactual distributions; an original modification of an index of polarization; and an application of the method to the Italian distribution of wages.
|Date of creation:||19 Oct 2000|
|Date of revision:|
|Note:||Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 55; figures: included|
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- Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994.
"Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach,"
Cahiers de recherche
9406, Universite de Montreal, Departement de sciences economiques.
- DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-44, September.
- John DiNardo & Nicole M. Fortin & Thomas Lemieux, 1995. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," NBER Working Papers 5093, National Bureau of Economic Research, Inc.
- Nidardo, J. & Fortin, N. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Papers 93-94-15, California Irvine - School of Social Sciences.
- Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Cahiers de recherche 9406, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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