Mincerian Wage Equation Research Articles

Commuting while Black: compensating differentials and Black–White wage gap in Canada

PurposeUsing the Canadian Census of 2016, the present study examines the Black and White gap in compensating differentials for their commute to work.Design/methodology/approachThe data are from the Canadian Census of 2016. The standard Mincerian wage regression, augmented by commute-related variables and their confounders, is estimated by OLS. The estimations use sample weights and heteroscedasticity robust standard errors.FindingsIn the standard Mincerian wage regressions, Black men are found to earn non-negligibly less than White men. No such gap is found among women. When the Mincerian wage equation is augmented by commute duration and its confounders, commute duration is revealed to positively predict wages of White men and negatively associate with wages of Black men. At the same time, in the specifications including commute duration and its confounders, the coefficient for the dummy variable identifying Black men is positive with a non-negligible size. The latter pattern indicates wage discrepancies among Black men by their commute duration. Again, no difference is found between Black and White women in these estimations.Research limitations/implicationsThe main caveat is that due to data limitations, causal estimates could not be produced.Practical implicationsFor the Canadian working men, the uncovered patterns indicate both between and within race gaps in the impact of commuting on wages. Particularly, Black men seem to commute longer towards relatively lower paying jobs, while the opposite holds for their White counterparts. However, Black men who reside close to their work earn substantially more than both otherwise identical White men and Black men who live far away from their jobs. The implications for research and policy are discussed.Originality/valueThis is the first paper focused on commute compensating differentials by race using Canadian data.

Gender wage gap in the formal and informal sector in the COVID-19 crisis period, of the national labor market and the state of Coahuila

One of the Sustainable Development Goals of the 2015-2030 agenda establishes guaranteeing equal remuneration between women and men for work of equal value. This objective is taken up in the 2018-2024 nation project for Mexico. In the project, the Federal Government aims to eliminate inequality gaps between women and men, as well as the obstacles that women face in all areas. The objective of this research is to estimate the Gender Wage Gap in the formal and informal sector of the labor market of the country and the state of Coahuila in the period of the COVID-19 crisis, to observe the trend of wage differences in the period 2019 – 2022. Mincerian wage equations (1974) were estimated for each gender with data from the National Occupation and Employment Survey (ENOE), for subordinate workers. The variables considered the sector in which the employee works and the condition of the working day. The Gender Wage Gap was estimated using the Blinder and Oaxaca (1973) methodology, with selection bias correction (Heckman, 1979). It was observed that the Gender Wage Gap in the context of crisis generally tended to close, this was because in the formal and informal sector the salary difference for women tended to decrease in 2020, while in 2022, during the economic recovery the Gender Wage Gap returned to the parameters of 2019 both nationally and in the state of Coahuila.

Educational Mismatch and Gender: A Comparison between Industry and Services in Spain

This study analysed the presence and influence of educational mismatch in the service and industry sectors in Spain, due to the lack of studies of this phenomenon in the latter sector. We also analyse its effect on wages and its role in creating a gender wage gap in the returns to a set of professional and personal characteristics. The heterogeneity in the improvement of workers’ qualifications between sectors in Spain and the lack of studies of this phenomenon in the industrial sector motivates interest in this comparative research between industry and services, which includes a gender perspective, given the interest of this topic in wage studies. To this end, an extension of the Mincer wage equation was applied to data from the 2018 Wages Structure Survey conducted by the Spanish National Statistics Institute. The results suggest that educational mismatch has a greater impact on women’s wages in the service sector than on those in the industrial sector and on men’s wages in both sectors. We also found wage differences in the returns to a set of professional and personal characteristics that suggest that the gender wage gap is greater in the service sector than in the industrial sector.

Does environmental regulation limit the income growth of Chinese migrant population? Empirical evidence from the CHIPS

It is a controversial question of whether environmental regulation can achieve the double dividend of improving environmental quality and increasing employment and income. This paper takes Chinese migrant population as the main research object and uses the Chinese Household Income Projects data (CHIPS) and the emission data of major pollutants at the prefecture-level city jointly. Based on the classic Mincer wage equation, we investigate the impact and mechanisms of environmental regulation on the income of Chinese migrant population. The results show that: (1) The intensity of environmental regulation significantly improves the income level of the migrant population, and for every 1% increase in the intensity of environmental regulation, the wage income of the mobile population will rise by 4.96%. (2) The documented positive effect of environmental regulation is more significant in non-public firms, the eastern regions and high-skilled workers. Conversely, for the female and elderly group, 1% increase in environmental regulations will restrain their income growth by 4.95% and 0.37%, respectively. (3) The influencing mechanisms include both the direct effect of labor demand and the indirect effects of firm performance and technological innovation. (4) we find that 1% increase in environmental regulations respectively raise the income of the low- and moderate-income migrant population by 10.834% and 3.579%, while having no significant impact on the high-income group, thus reducing the income gap of the migrant population. The findings of this paper provide theoretical support and practical evidence for achieving a coordinated development of ecological environmental protection and income improvement for socially disadvantaged groups in China.

Effects of automation on the gender pay gap: the case of Estonia

Abstract This paper investigates how investments in automation affect the gender pay gap. The evidence of the effects of automation on the labor market is growing; however, little is known about the implications of automation for the gender pay gap. The data used in this paper are from a matched employer–employee dataset incorporating detailed information on firms, their imports, and employee–level data for Estonian manufacturing and service employers for the period of 2006–2018. Through the use of the imports of automation goods as a proxy for the introduction of automation at the firm level, this paper estimates the effect of automation using simple Mincerian wage equations. The causality of the effect is further validated using propensity score matching (PSM). We find that introducing automation enlarges the gender pay gap, and PSM confirms that this also has a higher causal effect on the wages of male employees than female employees. The results imply that a higher representation of women in higher-paid positions does not guarantee a reduction in the gender pay gap in the presence of automation, and appropriate measures in education and retraining are needed to tackle the effect of automation on gender inequality.

Effect of the East African Community Common External Tariff on Household Labor Income in Kenya

This study investigates how changes in prices caused by the adoption of the East African Community Common External Tariff affected the labor incomes of households in Kenya. Households in rural, urban, and fully urban areas are analyzed. Workers are classified as skilled versus unskilled, formal versus informal, and agricultural versus non-agricultural sector workers. Data from the Kenya Integrated Household Budget Surveys 2005/2006 and 2015/2016 are used in the analysis. Data from these surveys were used to categorize workers and extract the price values for commodities. One hundred and twenty-one commodities classified as agricultural or manufactured goods are analyzed. Much of the reduction in import tariffs and hence reduction in commodity prices is on manufactured goods. A Mincerian wage equation that is corrected for survey design and heteroskedasticity is estimated. Further, a sensitivity analysis using a Poisson Pseudo Maximum Likelihood model is estimated. The price-labor income effect is observed to vary with the classification of workers in the country. Skilled, formal, and non-agricultural workers gained compared to their counterparts. Workers in counties that border the EAC countries and those in the major cities in the country gained more than other workers in other counties in the country. However, in all parts where gains are experienced, the magnitude is small. This shows that generally, the Common External Tariff did not have a very significant effect on labor incomes in Kenya.

Innovation as a firm-level factor of the gender wage gap

PurposeThis paper investigates the relationship of both technological (product and process) and non-technological (organizational and marketing) innovation with the gender wage gap at firms.Design/methodology/approachUsing employer–employee level data from Estonia, the authors estimate Mincerian wage equations, in order to show how innovation at the firm level is associated with the gender wage gap. Next, the authors use propensity score matching (PSM) to study the effects of the movement of men and women into innovative firms, how this shapes the gender wage gap at firms.FindingsThe authors find that both technological and non-technological innovation are associated with a larger gender wage gap at firms. The relationship between innovation and the contemporaneous gender wage gap at firms reflects to a significant extent the different selection of men and women with different time-invariant characteristics to innovative firms. Further, the authors find that movement of men and women to work at innovative firms is in longer term associated with larger gains in wages for men. The authors also observe that the relationship of innovation with gender wage gap is stronger in the case of women with children.Originality/valueMuch of the prior analysis focuses on the effects of technological innovation on gender-related labour market outcomes. The authors show here that the relationship of innovation at firms with higher gender wage gap is not only specific to technological innovation, but is more general, and is observed across different types of innovation indicators, including non-technological innovation. This study's results suggest that the effects of innovation on gender wage gap may reflect to an extent the higher demand for flexibility of employees for work purposes at innovative firms, which may increase the gender wage gap, especially between men and women with children.

Effect of COVID-19 Pandemic on Employment and Earning in Urban India during the First Three Months of Pandemic Period: An Analysis with Unit-Level Data of Periodic Labour Force Survey.

Urbanisation has accelerated the pace of development throughout the world. Big cities provide employment and livelihood for workers because of which workers have always migrated from rural areas to cities. However, in India, most of the migrant workers are absorbed in the low-paid and low-skilled jobs in the widespread informal sector. With the outbreak of COVID-19, lockdown was declared suddenly without any notice in India during the last week of March 2019 and most of the urban informal sector workers suddenly lost their jobs, and since they had no protection, they werepushed into poverty. Detailed analysis of such losses is of utmost importance so that perfectly appropriate remedial measures can be taken by the government. Periodic Labour Force Survey (PLFS)report of 2019-20 has analysed the situation of labour market in India for four quarters from July 2019 to June 2020. Therefore, the last quarter of the data will give us the valuable information about the urban labour market during the first three months of the COVID-19 pandemic period. This study analyses the possible reasons behind decline in monthly earnings and labour market participation of urban people in India during the period of outbreak of COVID-19 pandemic, i.e. during the period from April 2020 to June 2020, using the data of fourth quarter from each of the PLFSs of 2017-18, 2018-19 and 2019-20 since they have identical seasonal conditions. We have used cross-tabulation method to find out employment and unemployment rates of people inurban areas according to gender and type of employment for the period, from July to June, for the years 2018, 2019 and 2020. We have also tried to find the reasons behind the decline in income of workers during the first three months of the pandemic period, i.e. during the fourth quarter of 2019-20, compared to the fourth quarter of 2017-18 and that of 2018-19 using the Mincerian wage equation. Our empirical results have shown that urban workers in India have lost jobs and suffered from significant decline in income during the first three months of the COVID-19 pandemic period in almost all types of employment.

Endogeneity and Human Capital in Higher Education

The concept of human capital presupposes that formal schooling and experience enhances the productive capacity of individual workers through acquisition of knowledge and skills. Empirical studies on private rate of return to investment in education, around the world, indicate that an extra year in formal education has a positive benefit to the individual. This is in terms of increased lifetime earnings. Employing the Mincerian wage equation, this research article seeksto establish and empirically compare the private rate of return to investment in higher education for teachers in public secondary schools in Uasin Gishu County of Kenya. The research article employed a comparative research design. The target population and data sampling was taken from all the public secondary school teachers from the above County. Primary data from a sample of 574 secondary school teachers was collected by use of a questionnaire. The multivariate regression results showed years of schooling that negatively affected the private rate of return to schooling for secondary school teachers; while experience and experience squared had positive effect on private rate of return. Teachers who hold Diploma certificates earn an average of Kshs31, 231.250, Bachelor’s degree holders earn Kshs54, 047.879. The mean earning difference from teachers having Diploma certificates to teachers having Bachelor’s degrees was Kshs 22,816.629 (73.06%). The rate of return for a Diploma teacher was calculated at 4.20% and Bachelor’s degree at 8.37%. This research article suggests the presence of varying monetary benefits accruing to investment in higher education. Policy implications are discussed.

Estimating returns to education: The control function approach

This study aims to evaluate the effect of schooling years on wage level in Turkey by using the Mincer wage equation. This function is used as the baseline for the investigation of earnings determinants. For this purpose, the relationship between wage and education level of people is estimated by using a semiparametric regression model considering the control function approach. Various variables such as education level, experience, gender and marital status are estimated separately in the wage model by utilizing the Household Budget Statistics micro data set of 2017 in Turkey obtained by the Turkish Statistical Institute. The parametric model does not clarify the model clearly when functional form of relation is not known. To overcome this drawback, semiparametric regression model, which contains parametric and nonparametric variables, can be successfully applied. This model is extended by adding the 1997 education reform as a control variable. The achieved semiparametric test results from this study showed that there is a positive relationship between schooling years and wage level. On the other hand, control function approach results indicate the existence of fluctuant progress for the effect of schooling years on the wage level along the period.

Analysis of human capital assessment methods

The issues of the structure and measurement of human capital do not lose their relevance: this is caused by the constant changes in the labor market situation - the place where human capital is realized. Representatives of the financial and economic direction in the human capital concept development ambiguously approach the decision to assess its value, however, they are united by the applied focus of research, the desire to use their results in practice, primarily to improve the wage system. The article presents a comparative analysis of modern concepts and methods of measuring the human capital of enterprises. The characteristic features and differences of approaches are revealed, the author’s definitions of the category «human capital» and the modification of the J. Mincer wage equation. Human capital is recognized as the leading factor of economic growth, the driving force of innovative enterprise development and intensification of production.

Regional differentiation of human capital – analysis based on the Mincer wage equation

The main objective of this paper was an attempt to assess the differentiation of human capital at the level of Polish regions (voivodeships, NUTS-2 level). For this purpose, we used unidentifiable unit data from a survey the Central Statistical Office conducted on the structure of wages and salaries in October 2016 (Z-12), data from the Labour Force Survey (LFS), and data on the life expectancy of women and men. The GUS microdata from the Z-12 study was used to estimate the parameters of the Mincer-type extended wage regression, separately for each voivodeship. In the next step, these estimates were used as weights to calculate the human capital index, taking into account the health condition, education, and professional experience of employees. The values of the aforementioned measure were estimated for 2016 and 2019 (the assumption of weight stability over a short time period was made). The analysis conducted made it possible to determine which regions are characterised by the highest and lowest levels of human capital. The highest levels of human capital were found in Mazowieckie, Pomorskie, and Małopolskie. The voivodeships with the lowest level of the considered measures were Lubuskie, Warmińsko-Mazurskie, Podlaskie, Podkarpackie, and Łódzkie. When comparing the values of the human capital index between 2016 and 2019, it can be concluded that the regions with the lowest value of this measure were also characterised by lower dynamics (the only exception was Lubelskie). Such a situation will probably favor the divergence of human capital between regions. This may, therefore, translate into the persistence (or deepening) of differences in the levels of development of these voivodeships, compared to more developed regions.

Private Returns to Education in Developing Countries: Evidence from Kosovo

This paper aims to assess the reward that employees receive from education in the Kosovo labour market in terms of a wage premium. The incentive to address this issue comes as a result of the high increase in participation in formal education in recent decades, especially in higher education. The research is mainly focused on private benefits from education, in terms of wage increases, assessed through a private return to investment in education. For this research, microdata from the Labour Force Survey has been used, conducted by the Kosovo Agency of Statistics. We used only the sample of wage employees, which includes 9,300 individuals. The econometric model used in processing the empirical results is based on Mincer's wage equation. The results presented in section 5 reveal that the rate of return on education investment has been sufficient to keep the demand for education investment alive. In comparison to the other two levels of education (primary and secondary), the results indicate a very high rate of return to tertiary education, justifying the high enrollment in this level of education. Females receive a higher rate of return than males.

Determinants of Informal Labor Income: Does Demographic Matters?

In informal sector, labor is unnecessary to have a higher degree and special skill. So that, working in informal sector is one of the solutions for labor with low skill to gain an income and move out from poverty. This research aims to analyse determinant factors of labor income in informal sector, focused on demographic and social economics variables. By using SAKERNAS data from Indonesian Statistics, this research is adopted Mincer Wage Equation and conducted by Ordinary Least Square Method. The result shows that Mincer Equation still a robust model for modelling wage factor. Labor with more educational backgrounds come up with higher income since the education will refine the workability and capability to improve productivity. In the other hand, labor in informal sector who live in the village earn more income than those who work in the city area. This conclude that by right policy, informal sector can develop higher income as high as formal sector.

Twice as Hard to Get Half as Far? Differences in Sheepskin Effects Between Afro-Colombian and Non-Afro-Colombian Women

ABSTRACT This article explores Belman and Heywood’s sheepskin effect hypothesis using a modified Mincerian wage equation to test the sheepskin effect of returns on education in Colombia. This analysis is based on the 2014 Living Standards Survey from the National Department of Statistics. It includes variables that capture the possession of different levels of qualifications. A test for whether Afro-Colombian women obtain larger returns for signals of high productivity (e.g., a university degree) and lower returns for signals of low productivity (e.g., a secondary school diploma), compared to the non-Afro-Colombian women in the sample, found differential sheepskin effects. Afro-Colombian women in this sample received lower returns for low productivity signals (high school diplomas) than their counterparts do. In contrast, returns on higher levels of education (graduate studies) are higher for Afro-Colombian women than for the other analyzed group. Hence, the results suggest that Afro-Colombian women, as the saying goes, need to work twice as hard to get half as far. They need to rush to achieve higher levels of education, amidst severe hardship, to overcome the existing differences in the returns on education.

Educational wage premia and wage inequality in Turkey

This paper examines the effect of educational attainment on the male wage inequality in Turkey by employing Structure of Earnings Survey Micro Data compiled by TURKSTAT. We compare two years, namely 2006 and 2014, by estimating the Mincerian wage equation. Quantile regression method is utilised in order to explore the differentials in educational wage premia along the wage distribution. Our findings show that, despite the overall increase in the male wage inequality over the period, inequality declined at the top end of the wage distribution while displaying a significant increase at the bottom end. Education had a positive impact on both within and between groups inequality in both years. In general, educational wage premia in all education categories along the wage distribution increased, with two exceptions (vocational high school and higher education). Especially, in higher education category, educational wage premia have declined at the top half of the wage distribution while increased in lower quantiles.

Effects of Automation on the Gender Pay Gap: the case of Estonia

This paper investigates how investments in automation-intensive goods affects the gender pay gap. The evidence on the effects of automation on the labour market is growing; however, little is known about the implications of automation for the gender pay gap. The data used in the paper are from a matched employer-employee dataset incorporating detailed information on firms, their imports, and employee-level data for Estonian manufacturing and services employers for 2006–2018. We define automation using the imports of intermediates embedding automation technologies. The effect of automation is estimated using simple Mincerian wage equations and the causality of the effect is validated using propensity score matching. We find that introducing automation enlarges the gender pay gap. The negative effect of importing automation-intensive goods for female employees is about two to four percentage points larger than for male employees. The propensity score matching confirms that the introduction of automation has a higher causal effect on the wages of male employees than female employees.

Ownership type and earnings gap decomposition: Evidence from the Ghanaian labor market

AbstractWe present evidence of sector earnings gap decomposition in the Ghanaian labor market for the period 2009–2015. With a sample of 200 workers from state‐owned enterprises (SOEs) and 250 from privatized enterprises (PEs), we use the Mincerian wage equation, with the Oaxaca–Blinder and Juhn–Murphy–Pierce decompositions on earnings, and observe that the two ownership categories differ regarding personal characteristics and institutional factors, with employees in PEs receiving a wage premium (64%) over their SOE counterparts. In addition, employee observed characteristics explain only 36% of the earnings differential. The PE‐SOE differential is small at the top quartiles compared with previous studies. However, individuals at the bottom of the wage distribution in the public sector earn far lower than their counterparts in the private sector, signaling that low‐level SOE workers have not gained much despite the single spine salary structure policy initiated by the Government in 2008 to bridge the wage gap. This study contributes to wage analysis and decomposition by focusing on individual and institutional factors—personal characteristics, sector, and government policy—that are traditionally not combined in extant literature.

Impact of the 2008 wage review on the public-private sector wage-gap in Cameroon

This paper examines the impact of the 2008 wage review on the public-private sector wage-gap in Cameroon. Specifically, the paper evaluates the determinants of participating in the labour market and choosing formal sector employment; assesses the correlates of wages in the public and private sectors using the 2005 and 2010 Cameroon employment and informal sector surveys; and investigates the role of access to endowments and returns to endowments in explaining the public-private sector wage-gaps in 2005 and 2010. To achieve these objectives, the paper employs the bivariate probit model, Mincerian wage equations and the Neuman-Oaxaca decomposition approach. Results indicate that before and after the wage review, public sector workers enjoyed a wage premium over their formal private sector counterparts, more so after the review – registering an impact of 0.032 log points. Findings also reveal that the human capital variables – education and experience – solidly contributed in mitigating the public-private sector wage-gap. These results show that the 2008 wage review helped to augment the public sector wage premium in Cameroon over the period under study. These findings are useful inputs in animating public-private sector debates on human capital development and the structure of wages in developing country settings.

A SURVEY STUDY OF HUMAN CAPITAL AND EDUCATIONAL ATTAINMENT

The development of human capital is the essential thing to determine a country’s growth. The existence of a country’s human capital quality depends on its education. The change of information in society is going rapidly and it is important to cope up with information and knowledge to all economic process. With the role of human capital in the modern societies many people are still unaware about the process of educational production. This paper is aimed to provide the process on human capital formation and educational attainment from microeconomic perspective. The literature reviews indicate that education attainment in the society are influence by many factors namely religion, family background, teacher’s quality and incentive, and the peer effects. In the empirical studies, Mincerian wage equation is the most widely used to analyze education and earnings. Besides from educational production function, to determine the quality of human capital, fiscal policy through taxation and educational subsidies have impact to the end result of students.