Selectivity and the gender wage gap decomposition in the presence of a joint decision process

Marcia M. A. Schafgans and Morton Stelcnery

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper we revisit the gender decomposition of wages in the presence of selection bias. We show that when labor market participation decisions of couples are not independent, the sample selection corrections used in the literature have been incomplete (incorrect). We derive the appropriate sample selection corrections, based on a reduced form model for the joint participation decisions of both spouses. The influence that husbands’ participation decision has on the female participation decision also highlights the importance of using data on both spouses for the analysis of the gender wage gap. Taking account of these issues might influence the outcome of the decomposition analysis and affect the evidence of discrimination. We analyze its potential impact by analyzing the gender earnings differential using Canadian census data.

Keywords: sample selection model; gender wage differences; Oaxaca wage decomposition; ‘discrimination’ (search for similar items in EconPapers)
JEL-codes: C34 D13 J31 J71 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2006-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:6809

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