 Decomposing changes in wage distributions: a unified approachCanadian Journal of Economics, 2002, vol. 35, issue 4, 646-688 Abstract: Over the last fifteen years, many researchers have attempted to explain the determinants and changes of wage inequality. I propose a simple procedure to decompose changes in the distribution of wages or in other distributions into three factors: changes in regression coefficients; the distribution of covariates, and residuals. The procedure requires only estimating standard OLS regressions augmented by a logit or probit model. It can be extended by modelling residuals as a function of unmeasured skills and skill prices. Two empirical examples showing how the procedure works in practice are considered. In the first example, sources of differences in the wage distribution in Alberta and British Columbia are considered; in the second, sources of change in overall wage inequality in the United States, 1973-99, are re-examined. Finally, the proposed procedure is compared with existing procedures. JEL-codes: J3 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:35:y:2002:i:4:p:646-688 Ordering information: This journal article can be ordered from Access Statistics for this article Canadian Journal of Economics is currently edited by Zhiqi Chen More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC. |
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