Abstract
This paper considers measures of wage differentials not solely determined by mean comparisons but summarizing differences across complete wage distributions. The approach builds on considerations of risk or inequality aversion and on standard expected utility concepts. In an application to the gender pay gap in Luxembourg the disadvantage of women persists according to the proposed measures: lower mean wages for women are not compensated by differences in higher moments of wage distributions (e.g., by less dispersion) at least for realistic assumptions about women preferences toward risk and inequality. The paper also illustrates an original empirical model for wage distributions in the presence of covariates and under endogenous labour market participation.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Agnew JR, Anderson LR, Gerlach JR, Szykman LR (2008) Who chooses annuities? An experimental investigation of the role of gender, framing, and defaults. Am Econ Rev 98(2): 418–422
Albrecht J, Björklund A, Vroman S (2003) Is there a glass ceiling in Sweden?. J Labor Econ 21(1): 145–177
Albrecht J, van Vuuren A, Vroman S (2009) Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands. Labour Econ 16: 383–396
Arulampalam W, Booth AL, Bryan ML (2007) Is there a glass ceiling over Europe? Exploring the gender pay gap across the wage distribution. Ind Labor Relat Rev 60(2): 163–186
Atkinson AB (1970) On the measurement of inequality. J Econ Theory 2: 244–263
Autor DH, Katz LF, Kearney MS (2005) Rising wage inequality: the role of composition and prices NBER working paper 11628. National Bureau of Economic Research, Cambridge
Barsky R, Bound J, Charles KK, Lupton JP (2002) Accounting for the black-white wealth gap: a nonparametric approach. J Am Stat Assoc 97(459): 663–673
Biewen M, Jenkins SP (2005) Accounting for differences in poverty between the USA, Britain and Germany. Empir Econ 30(2): 331–358
Blackburn ML (2007) Estimating wage differentials without logarithms. Labour Econ 14(1): 73–98
Blinder A (1973) Wage discrimination: Reduced form and structural estimates. J Hum Resour 8: 436–455
Buchinsky M (1998) The dynamics of changes in the female wage distribution in the USA: A quantile regression approach. J Appl Econ 13(1): 1–30
Chernozhukov V, Fernández-Val I, Melly B (2009) Inference on counterfactual distributions. CEMMAP working paper CWP09/09. Centre for Microdata Methods and Practice, Institute for Fiscal Studies, University College of London
Cobb-Clark D (2001) Getting ahead: The determinants of and payoffs to internal promotion for young men and women. Res Labor Econ 20: 339–372
Cruces G, Wodon Q (2007) Risk-adjusted poverty in Argentina: Measurement and determinants. J Dev Stud 43(7): 1189–1214
Davidson R (2008) Stochastic dominance. In: Durlauf SN, Blume LE (eds) The new palgrave dictionary of economics. Palgrave Macmillan, Basingstoke
de la Rica S, Dolado J, Llorens V (2008) Ceilings or floors? Gender wage gaps by education in Spain. J Popul Econ 21(3): 751–776
del Rìo C, Gradin C, Cantò O (2011) The measurement of gender wage discrimination: the distributional approach revisited. J Econ Inequal 9(1): 57–86
Di Nardo J, Fortin NM, Lemieux T (1996) Labor market institutions and the distribution of wages, 1973–1992: a semiparametric approach. Econometrica 64(5): 1001–1044
Dolton PJ, Makepeace G (1985) The statistical measurement of discrimination. Econ Lett 18: 391–395
Donald SG, Green DA, Paarsch HJ (2000) Differences in wage distributions between Canada and the United States: An application of a flexible estimator of distribution functions in the presence of covariates. Rev Econ Stud 67(4): 609–633
Favaro D, Magrini S (2008) Group versus individual discrimination among young workers: A distributional approach. J Socio-Econ 37(5): 1856–1879
Firpo S, Fortin NM, Lemieux T (2009) Unconditional quantile regressions. Econometrica 77(3): 953–973
Fortin NM, Lemieux T (1998) Rank regressions, wage distributions, and the gender gap. J Hum Resour 33(3): 610–643
Foster JE, Székely M (2008) Is economic growth good for the poor? Tracking low incomes using general means. Int Econ Rev 49(4): 1143–1172
Gardeazabal J, Ugidos A (2005) Gender wage discrimination at quantiles. J Popul Econ 18(1): 165–179
Gastwirth JL (1975) Statistical measures of earnings differentials. Am Stat 29: 32–35
Hadar J, Russell WR (1969) Rules for ordering uncertain prospects. Am Econ Rev 59(1): 97–122
Hall P, Wolff RCL, Yao Q (1999) Methods for estimating a conditional distribution function. J Am Stat Assoc 94(445): 154–163
Harsanyi JC (1955) Cardinal welfare, individualistic ethics, and interpersonal comparisons of utility. J Polit Econ 63(4): 309–321
Hartog J, Ferrer-i-Carbonell A, Jonker N (2002) Linking measured risk aversion to individual characteristics. Kyklos 55(1): 3–26
Huber M, Melly B (2011) Quantile regression in the presence of sample selection. Economics working paper series 1109. University of St. Gallen, School of Economics and Political Science
Jenkins SP (1994) Earnings discrimination measurement: a distributional approach. J Econ 61: 81–102
Kleiber C, Kotz S (2003) Statistical size distributions in economics and actuarial sciences. Wiley series in probability and statistics. John Wiley and Sons Inc, New York
Le Breton M, Michelangeli A, Peluso E (2011) A stochastic dominance approach to the measurement of discrimination. Forthcoming in J Econ. Theory
Lemieux T (2002) Decomposing changes in wage distributions: a unified approach. Can J Econ 35(4): 646–688
Machado JAF, Mata J (2005) Counterfactual decomposition of changes in wage distributions using quantile regression. J Appl Econ 20: 445–465
Makdissi P, Wodon Q (2003) Risk-adjusted measures of wage inequality and safety nets. Econ Bull 9(1): 1–10
Manning A, Robinson H (2004) Something in the way she moves: a fresh look at an old gap. Oxford Econ Papers 56(2): 169–188
Melly B (2005) Decomposition of differences in distribution using quantile regression. Labour Econ 12: 577–590
Millimet DL, Wang L (2006) A distributional analysis of the gender earnings gap in urban China. Contribut Econ Anal Policy 5(1): 1–48
Mood AM, Graybill FA, Boes DC (1987) Introduction to the theory of statistics, 3rd edn. McGraw-Hill series in probability and statistics. McGraw-Hill, Auckland
Neal DA, Johnson WR (1996) The role of premarket factors in black-white wage differences. J Polit Econ 104(5): 869–895
Ñopo HR (2008) Matching as a tool to decompose wage gaps. Rev Econ Stat 90(2): 290–299
Oaxaca RL (1973) Male-female wage differentials in urban labor markets. Int Econ Rev 14: 673–709
Oaxaca RL, Ransom MR (1994) On discrimination and the decompostion of wage differentials. J Econ 61: 5–21
Peracchi F (2002) On estimating conditional quantiles and distribution functions. Comput Stat Data Anal 38(4): 433–447
Racine JS, Green CA (2004) Robust estimation of union and gender wage gaps. Working Paper COBA-ECON-04-01, College of Business Administration, University of South Florida
Rawls J (1971) A theory of justice. Belknap Press, Cambridge
Saigo H, Shao J, Sitter RR (2001) A repeated half-sample bootstrap and balanced repeated replications for randomly imputed data. Surv Methodol 27(2): 189–196
Saposnik R (1981) Rank-dominance in income distributions. Public Choice 36(1): 147–151
Singh SK, Maddala GS (1976) A function for size distribution of incomes. Econometrica 44(5): 963–970
Smith MD (2003) Modelling sample selection using Archimedean copulas. Econometr J 6(1): 99–123
StataCorp (2007) Stata statistical software: release 10. StataCorp LP, College Station
STATEC (2007) Egalité hommes-femmes, mythe ou réalité? Cahier économique 105, STATEC, Luxembourg
Trivedi PK, Zimmer DM (2007) Copula modeling: an introduction for practitioners. Found Trends Econometr 1(1): 1–111
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Van Kerm, P. Generalized measures of wage differentials. Empir Econ 45, 465–482 (2013). https://doi.org/10.1007/s00181-012-0608-y
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00181-012-0608-y