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Abstract for:

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

Marcia M  Schafgans,  Morton   Stelcnery,  December 2006
Paper No' EM/2006/513: | Full paper (pdf)
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Keywords: Sample selection model; gender wage differences, Oaxaca wage decomposition, ‘discrimination’.

JEL Classification: C34; J71; D13; J31

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This Paper is published under the following series: Econometrics
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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.