Gender versus Ethnic Wage Differentials among Professionals: Evidence from Israel

Abstract

The purpose of this paper is to investigate wage structures of professional workers in the Israeli labor market using data from the 1983 Israeli census and correcting for selectivity at the state of entrance into the occupation. The sample of professionals is decomposed into several sub- samples: Jewish men and Jewish women; within the Jewish sample a dis- tinction is made between Westerners and Easterners. The core of this study is the investigation of wage differentials between the various groups, taking into account differences in entrance probabilities. The standard OAXACA decomposition does not take into account different probabilities of entering the professional occupations (i.e., occupational segregation). In order to incorporate this type of segregation into the wage differential decomposi- tions, two statistical methodologies are merged: the OAXACA methodology and the HECKMAN selectivity bias correction procedure. The decomposition procedure is then modified in order to take into account the contribution of segregation to the characteristics and the discrimination components. We propose four alternative decompositions of the selectivity corrected wage equations and present the results based on these decompositions.