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Self-selection and the Distribution of Hourly Wages

James Heckman and Guilherme L Sedlacek

Journal of Labor Economics, 1990, vol. 8, issue 1, S329-63

Abstract: This article formulates and estimates alternative equilibrium models of industrial wage determination and self-selection. In explaining industrial wage differentials, the authors find that it is important to account for heterogenous sector-specific skills and self-selection decisions by agents concerning their sector of employment. The classical Roy model is rejected. So is an efficiency units model of the labor market. A revised Roy model that accounts for comparative advantage in the choice of industrial sectors and choice between market and nonmarket work is much more successful in explaining cross-section wage distributions and their evolution over time. Demand-Side Factors Copyright 1990 by University of Chicago Press.

Date: 1990
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Handle: RePEc:ucp:jlabec:v:8:y:1990:i:1:p:s329-63