Estimation of Wage Gains and Welfare Gains from Self-Selection Models

Anders Bjorklund

No 105, Working Paper Series from Research Institute of Industrial Economics

Abstract: In this paper we consider the basic self-selection model for the effects of education, training, unions, and other activities on wages. We show that past models have ignored "heterogeneity of rewards" to the activity--i.e., differences across individuals in the rate of return to the activity--as a source of selection bias. We model such heterogeneity, show how its presence can be tested, and draw out its implications for the wage and welfare gains to the activity. An empirical application provides strong support for such heterogeneity.

Keywords: Education; Unions; Wage (search for similar items in EconPapers)
JEL-codes: E24 I20 (search for similar items in EconPapers)
Pages: 27 pages
Date: 1983-12
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Citations: View citations in EconPapers (4)

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