Wage Equations with Unreported Earnings: A Methodological Reassessment for the Case of Mexico

Robert Duval Hernandez
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Robert Duval Hernandez: Open University of Cyprus
Authors registered in the RePEc Author Service: Robert Duval-Hernandez

Sobre México. Revista de Economía, 2026, vol. 1, issue 13, 35-66

Abstract: This paper estimates Mincerian wage equations using various methods to address the nonresponse in earnings in the Encuesta Nacional de Ocupación y Empleo (ENOE) survey. Specifically, it compares results obtained from selection models, hot-deck imputation methods, and models without any correction for nonresponse, employing both linear and quantile regressions. Its main contribution is to demonstrate how selection models can be applied to this context and to propose a variable that can be used as an exclusion restriction in such models. Our findings indicate that different methods for adjusting wage nonresponse yield similar estimates when the Mincerian equation is estimated at the conditional mean or median. However, these methods diverge when analyzing the tails of the conditional wage distribution, which may help explain discrepancies found in previous studies regarding estimates of labor poverty and wage inequality when accounting for wage nonresponse.

JEL-codes: C18 C81 D10 J24 (search for similar items in EconPapers)
Date: 2026
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