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Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds
Author(s) -
Blundell Richard,
Gosling Amanda,
Ichimura Hidehiko,
Meghir Costas
Publication year - 2007
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/j.1468-0262.2006.00750.x
Subject(s) - economics , distribution (mathematics) , wage , inequality , wage inequality , labour economics , composition (language) , selection (genetic algorithm) , work (physics) , econometrics , demographic economics , mathematics , mathematical analysis , mechanical engineering , linguistics , philosophy , artificial intelligence , computer science , engineering
This paper examines changes in the distribution of wages using bounds to allow for the impact of nonrandom selection into work. We show that worst case bounds can be informative. However, because employment rates in the United Kingdom are often low, they are not informative about changes in educational or gender wage differentials. Thus we explore ways to tighten these bounds using restrictions motivated from economic theory. With these assumptions, we find convincing evidence of an increase in inequality within education groups, changes in educational differentials, and increases in the relative wages of women.