Journal article

On the Sensitivity of Wage Gap Decompositions

    2020
Published in:
  • Journal of Labor Research. - 2020, vol. 41, no. 1, p. 1-33
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 current values (as frequently seen in wage decompositions) entails smaller explained and larger unexplained components than when including both their current values and histories in the analysis. Given the sensitivity of our results, we advise caution when using wage decompositions for policy recommendations.
Faculty
Faculté des sciences économiques et sociales
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
License undefined
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/309256
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