Is the Israeli Labor Market Segmented? Revisiting the Mixture Regression Model

Ezra Fishman and Ayal Kimhi

No 164512, Discussion Papers from Hebrew University of Jerusalem, Department of Agricultural Economics and Management

Abstract: We use a mixture regression model to identify segmentation in the Israeli labor market, and propose a new method for assigning workers to simulated segments. We identified a lowwage segment and a high-wage segment, as well as a third segment with a large wage variability that we interpret as “noisy” observations. We found quantitatively small but qualitatively reasonable differences in workers’ characteristics between the low-wage and high-wage segments, while the coefficient differences were much larger, indicating that much of the wage disparity in Israel is due to unobserved factors rather than to observable characteristics. Some policy-relevant insights are derived.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
Pages: 25
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ags:huaedp:164512

DOI: 10.22004/ag.econ.164512

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