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Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: The Importance of Covariates

Aurora Galego and João Pereira

Environment and Planning A, 2014, vol. 46, issue 10, 2514-2532

Abstract: Unlike previous studies, in this paper we estimate the contribution of covariates for the regional wage decomposition components along the wage distribution employing a method first described in 2009 by S Firpo, N Fortin, and T Lemieu ( Econometrica 77 953–973). We consider the case of Portugal, a country with persistent and large regional wage gaps. We find that education, occupation, and firm size are the most important factors in explaining the growing importance of the composition effect. The wage structure effect, in turn, is mainly determined by differences in reward for experience and tenure. Moreover, we conclude that the importance of these covariates for both effects is not equal along the wage distribution.

Keywords: regions; wage differentials; wage decompositions; unconditional quantile regression; recentred influence function (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (13)

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Working Paper: Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: the Importance of Covariates (2013) Downloads
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DOI: 10.1068/a130055p

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