selection investment and women s relative wages over time in theory growing wage inequality within gender should cause women to invest more in their market productivity and should differentially pull able women into the workforce our paper uses heckman s two step estimator and identification at infinity on repeated current population survey cross sections to calculate relative wage series for women since 1970 that hold constant the composition of skills we find that selection into the female full time full year workforce shifted from negative in the 1970s to positive in the 1990s and that the majority of the apparent narrowing of the gender wage gap reflects changes in female workforce composition we find the same types of composition changes by measuring husbands wages and national longitudinal survey iq data as proxies for unobserved skills our findings help to explain why growing wage equality between genders coincided with growing inequality within gender

more on identification in detailed wage decompositions wage decompositions are often used to decompose wage differentials of two demographic groups into differences in characteristics and differences in returns to those characteristics the latter part is used as an estimate of the degree of discrimination a problem with this approach is that the contributions of individual dummy variables to the wage decomposition are not identified this note proposes a simple solution to the identification problem the solution is illustrated with an empirical application to spanish labor market data

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

on decomposing the wage gap a critical comment on blinder s method many studies have found that the impact of schooling on earnings is greater for females than for males despite the fact that females tend to earn less both absolutely and controlling for personal characteristics this study investigates possible

swimming upstream floating downstream comparing women s relative wage progress in the united states and denmark applying a new decomposition method to u s psid and danish longitudinal sample data the authors compare how u s and danish gender wage gaps developed between 1983 and 1995 in denmark they find the wage gap widened because the worsening in women s relative returns to observable human capital attributes as well as in their ranking relative to men in unobserv able productive attributes more than offset their wage gains from improved observable qualifications relative to men s in the united states in contrast the gender convergence in qualifications offset adverse influences including in creasing wage dispersion throughout the labor market to result in a narrowing of the gap the largest increase in the gap in denmark was experienced by women in the top earnings decile and the largest decline in the gap in the united states affected those at the top and in the middle of the distribution

the determinants of earnings a behavioral approach we survey the determinants of earnings and propose a framework for understanding labor market success we suggest that the advantages of the children of successful parents go considerably beyond the benefits of superior education the inheritance of wealth or the genetic inheritance of cognitive ability we suggest that noncognitive personality variables such as attitudes towards risk ability to adapt to new economic conditions hard work and the rate of time preference affect both earning and the transmission of economic status across generations

changes in the male female wage gap 1976 85 this study uses detailed information on work experience tenure and on the job training collected in the 1976 and 1985 questionnaires of the panel study of income dynamics to account for changes in wage differentials between white men and white women over these nine years decompositions of changes in the wage gap are used to illustrate the contribution of individual factors between 1976 and 1985 the wage gap between white men and women narrowed by approximately 4 percent this study finds that nearly 50 percent of this reduction was due to average changes in job tenure and other work history variables over this period

labor market consequences of poor attitude and low self esteem in youth in a recent national survey that asked employers to rank the importance of particular applicant traits for nonsupervisory and production positions applicant s attitude was the only trait that was reported to be very important in fact academic performance years of schooling completed teachers recommendations and industry based credentials certifying applicant skills all ranked lower bowles et al 2000 a second independent survey of employers in holzer and wissoker 2000 also suggests that more weight is placed on a good attitude than on basic skills among new hires of low skilled workers in this article i assess the role of pre labor market attitude and self esteem in explaining disparities observed in the labor market experiences of a sample of high school graduates the apparent importance employers ascribe to attitude and self esteem gives clear reason to expect that such a relationship exists i demonstrate that such survey responses are corroborated by real economic consequences for those with poor attitude and self esteem using longitudinal data on a 1972 cohort of high school graduates i show that high school students who reveal negative attitudes and self esteem subsequently attain fewer years of postsecondary education relative to their high school cohort are less likely to be employed 14 years following high school and where working for pay earn less accounting directly for the labor force participation decision i also document a higher incidence of unemployment among these individuals furthermore i find evidence that negative attitudes and self esteem are associated with jobs later in life that require the individual to spend time working with things as opposed to people for example and that those who exhibit poor pre labor market attitude and self esteem are subsequently more closely supervised at work and given less discretion in their daily activities all told attitude and self esteem in youth are shown to have important and long lasting economic implications in the following section i briefly discuss related literatures specifically two areas of the literature are considered the effect of joblessness on self esteem and the relationship between other noncognitive skills or worker attributes and labor market outcomes section ii then introduces the data and methods used in investigating the relationships in question empirical results are reported in section iii and are followed by some discussion and concluding remarks i previous literature this article is closely related to two areas of existing literature first there exists a small body of literature that documents a relationship between labor market activity and self esteem however this literature has heretofore focused more on the damage of joblessness to an individual s perception of self worth than on the direction of causality considered here for example goldsmith et al 1995 1996a find relationships between contemporaneous joblessness and self esteem and historic joblessness and subsequent self esteem respectively arguably the causality between attitudes and jobless spells is not clearly in one direction or the other in this article i contribute clear evidence of the reverse causation causation running from attitude and self esteem to future labor market outcomes second there is a growing body of literature on the importance of noncognitive skills in wage determination this literature suggests that measures of aggression and withdrawal osborne 1999 individual motivation goldsmith et al 2000 behavioral problems in high school cawley et al 2001 one s locus of control or outlook on life goldsmith et al 1997b osborne 1999 bertrand and mullainathan 2001 coleman and deleire 2003 and mental health bartel and taubman 1979 1986 frank and gertler 1991 mullahy and sindelar 1993 each have predictive power with respect to wages that employer surveys suggest that attitude is highly valued alone leads one to anticipate that attitude be related to earnings

the allocation of aggregate risk secondary market trades and financial boom bust cycles the financial crisis of 2007 08 started with the collapse of the market for collateralized debt obligations backed by subprime mortgages in this paper we present a mechanism aimed at explaining how a freeze in a secondary debt market can be amplified and propagated to the real economy and thereby cause a recession moreover we show why such a process is likely to be especially strong after a prolonged expansion based on the growth of consumer credit and endogenously low risk premia hence our model offers a new perspective on the links between the real and financial sectors and we show how it can help make sense of several macro economic features of the 2001 09 period the key elements of the model are heterogeneity across agents in terms of risk tolerance a financial sector that allocates systematic risk efficiently across agents and real decisions that depend on the price of risk

distributional changes in the gender wage gap using panel study of income dynamics psid data the authors analyze changes in wage differentials between white men and women over time and across the entire wage distribution the authors decompose distributional changes in the gender wage gap to assess the contribution of observed characteristics measuring individual productivity they find that the gender wage gap narrowed by 16 at the lowest decile and by less than 5 at the highest decile the decomposition results indicate that changes in the gender wage gap are mainly attributable to changes in educational attainment at the top of the wage distribution with a sizable part due to work history changes at the bottom the findings further reveal that the accuracy of the results depends on the direction in which the decompositions are performed

why the gender gap in wages narrowed in the 1980s since 1976 the gender gap in wages on average declined by about 1 per year this article focuses on identifying the factors underlying this trend three data sets are analyzed the current population survey the panel study of income dynamics and the national longitudinal survey we find that convergence in measurable work related characteristics schooling and work experience explains one third to one half the narrowing the remainder is attributable to a relative increase in women s returns to experience as well as to declining wages in blue collar work and other factors

estimating the effects of unions on wage inequality in a panel data model with comparative advantage and nonrandom selection this article considers the estimation of the structure of wages in union and nonunion sectors it proposes an estimator that extends standard panel data techniques to the case in which the return to the permanent component of the error term is differently rewarded in the two sectors the econometric model is used to estimate the effect of unions on both the level and the variance of wages in canada the findings indicate that unions increase the average wage of workers and compress the returns to observable measures of skill and to a time invariant unobservable measure of skill

inter industry wage differentials and the gender wage gap an identification problem an intuitively appealing method for estimating gender wage gaps by industry is shown to yield estimates that vary according to the arbitrary choice of left out reference groups for non industry cat

the changing distribution of male wages in the uk this paper uses microeconomic data from the u k family expenditure surveys fes and the general household surveys ghs to describe and explain changes in the distribution of male wages since the late 1970s wage inequality has risen very fast in the u k and this rise is characterized both by increasing education and age differentials we show that a large part of the changes in the u k can be summarized quite simply as increases in eduction differentials and a decline of growth of entry level wages which persist subsequently this fact we interpret as cohort effects we also show that like in the u s an important aspect of rising wage inequality is increased within group wage dispersion finally we use the ghs to evaluate the role of alternative education measures

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

the wealth of mexican americans this paper analyzes the sources of disparities in the relative wealth position of mexican americans results reveal that unlike the racial wealth gap mexican americans wealth disadvantage is in large part not the result of differences in wealth distributions conditional on the underlying determinants of wealth rather mexican americans wealth disadvantage is attributable to the fact that these families have more young children and heads who are younger mexican americans low educational attainment also has a direct effect in producing a wealth gap relative to other ethnic groups even after differences in income are taken into account income differentials are important but do not play the primary role in explaining the gap in median net worth finally geographic concentration is generally unimportant but does contribute to narrowing the wealth gap between wealthy mexican americans and their white and black counterparts

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

negotiating free trade we develop a dynamic bargaining model in which a leading country endogenously decides whether to sequentially negotiate free trade agreements with subsets of countries or engage in simultaneous multilateral bargaining with all countries at once we show how the structure of coalition externalities shapes the choice between sequential and multilateral bargaining and we identify circumstances in which the grand coalition is the equilibrium outcome leading to worldwide free trade a model of international trade is then used to illustrate equilibrium outcomes and how they depend on the structure of trade and protection global free trade is not achieved when the political economy motive for protection is sufficiently large furthermore the model generates both building bloc and stumbling bloc effects of preferential trade agreements in particular we describe an equilibrium in which global free trade is attained only when preferential trade agreements are permitted to form a building bloc effect and an equilibrium in which global free trade is attained only when preferential trade agreements are forbidden a stumbling bloc effect the analysis identifies conditions under which each of these outcomes emerges

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women