On the Sensitivity of Wage Gap Decompositions
- Huber, Martin Department of Economics, University of Fribourg
- Solovyeva, Anna NORC at the University of Chicago, Chicago, IL, USA
-
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 et du management
- Department
- Département d'économie politique
- Language
-
- English
- Classification
- Economics
- License
- License undefined
- Identifiers
-
- RERO DOC 330177
- DOI 10.1007/s12122-020-09302-7
- Persistent URL
- https://folia.unifr.ch/unifr/documents/309256
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