Research report

On the sensitivity of wage gap decompositions

    01.10.2018

30

English This paper investigates the sensitivity of average wage gap decompositions to methods resting on different assumptions regarding endogeneity of observed characteristics, sample selection into employment, and estimators’functional form. Applying five distinct decomposition techniques to estimate the gender wage gap in the U.S. using data from the National Longitudinal Survey of Youth 1979, we find that the magnitudes of the wage gap components are generally not stable across methods. Furthermore, the definition of the observed characteristics matters: merely including their levels (as frequently seen in wage decompositions) entails smaller explained and larger unexplained components than when including both their levels and histories in the analysis. Given the sensitivity of our results, we advise caution when using wage decompositions for policy recommendations.
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Faculty
Faculté des sciences économiques et sociales
Language
  • English
Classification
Economics
Other electronic version

Faculté SES

Series statement
  • Working Papers SES ; 497
License
License undefined
Identifiers
  • RERO DOC 323155
  • RERO R008854477
Persistent URL
https://folia.unifr.ch/unifr/documents/306870
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