Production Function and Wage Equation Estimation with Heterogeneous Labor: Evidence from a New Matched Employer-Employee Data Set

Judith Hellerstein and David Neumark

No 10325, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we first describe the 1990 DEED, the most recently constructed matched employer-employee data set for the United States that contains detailed demographic information on workers (most notably, information on education). We then use the data from manufacturing establishments in the 1990 DEED to update and expand on previous findings, using a more limited data set, regarding the measurement of the labor input and theories of wage determination. We find that the productivity of women is less than that of men, but not by enough to fully explain the gap in wages, a result that is consistent with wage discrimination against women. In contrast, we find no evidence of wage discrimination against blacks. We estimate that both the wage and productivity profiles are rising but concave to the origin (consistent with profiles quadratic in age), but the estimated relative wage profile is steeper than the relative productivity profile, consistent with models of deferred wages. We find a productivity premium for marriage equal to that of the wage premium, and a productivity premium for education that somewhat exceeds the wage premium. Exploring the sensitivity of these results, we also find that different specifications of production functions do not have any qualitative effects on the these results. Finally, the results indicate that the returns to productive inputs (capital, materials, labor quality) as well as the residual variance are virtually unaffected by the choice of the construction of the labor quality input.

JEL-codes: J3 J7 (search for similar items in EconPapers)
Date: 2004-02
New Economics Papers: this item is included in nep-ltv
Note: LS PR
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Citations: View citations in EconPapers (106)

Published as Hulten, Charles and Ernst Berndt (eds.) Hard-to-Measure Goods and Services: Essays in Memory of Zvi Griliches. Chicago: University of Chicago Press, 2007.
Published as Production Function and Wage Equation Estimation with Heterogeneous Labor: Evidence from a New Matched Employer-Employee Data Set , Judith K. Hellerstein, David Neumark. in Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches , Berndt and Hulten. 2007

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Chapter: Production Function and Wage Equation Estimation with Heterogeneous Labor: Evidence from a New Matched Employer-Employee Data Set (2007)
Working Paper: Production Function and Wage Equation Estimation with Heterogenous Labor: Evidence from a New Matched Employer-Employee Dataset (2004)
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