Ability, sorting and wage inequality

Pedro Carneiro and Sokbae (Simon) Lee

No CWP16/05, CeMMAP working papers from Centre for Microdata Methods and Practice, Institute for Fiscal Studies

Abstract: In this paper we examine the importance of heterogeneity and self-selection into schooling for the study of inequality. Changes in inequality over time are a combination of price changes, selection bias and composition effects. To distinguish them, we estimate a semiparametric selection model for a sample of white males surveyed (during the 1990s) by the National Longitudinal Survey of Youth, but our results are applicable to broader analyses of inequality. In our data, as college enrollment increases in the economy, average college wages decrease and average high school wages increase, and therefore inequality between college and high school groups decreases. Moreover, selection bias causes us to understate the growth of different measures of the average return to schooling in our sample. It also leads us to understate the increase in wage dispersion at the top of the college wage distribution, and to overstate it at the bottom of the college wage distribution.

Keywords: Comparative advantage; composition effects; local instrumental variables; selection bias; semiparametric estimation; wage distribution. (search for similar items in EconPapers)
Pages: 57 pp.
Date: 2005-11-30
New Economics Papers: this item is included in nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://cemmap.ifs.org.uk/wps/cwp1605.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to cemmap.ifs.org.uk:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ifs:cemmap:16/05

Ordering information: This working paper can be ordered from
The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE

Access Statistics for this paper

More papers in CeMMAP working papers from Centre for Microdata Methods and Practice, Institute for Fiscal Studies The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE. Contact information at EDIRC.
Bibliographic data for series maintained by Emma Hyman ().