Identification in detailed wage decompositions
Article Abstract:
Identification problems are found in the standard wage decomposition methodology in the context of gender wage differentials from semilog wage regressions. The problems are caused by the arbitrary nature of which reference groups the researcher chooses with respect to dummy variables. However, the overall decomposition and the separately estimated endowment effects are invariant with respect to the choice of left-out reference groups. It was shown that the same arguments apply to affine transformations of continuous variables that involve a location parameter.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1999
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Measuring income tax discrimination
Article Abstract:
A procedure for measuring the effect of systematic discrimination in the income tax in Australia was proposed. It was shown that a welfare loss is caused by the group specificity of schedules, the dollar value of which is the measure of discrimination used. Discrimination equated to a loss in vertical equity. The Australian income tax was found to discriminate against wage and salary earners, causing about 1% loss of social welfare in 1984.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1999
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