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Counterfactual quantile decompositions with selection correction taking into account Huber/Melly (2015): An application to the German gender wage gap

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  • Biewen, Martin
  • Fitzenberger, Bernd
  • Seckler, Matthias

Abstract

Albrecht et al. (2009) use the approach of Buchinsky (1998; 2001) to estimate selection corrected quantile regressions for the estimation of counterfactual wage distributions. Huber and Melly (2015) point to the fact that the Buchinsky approach requires a conditional independence assumption that may be violated in applications and suggest a test for this. This paper proposes to transform the original quantile regression model in order to ensure the conditional independence assumption to hold when it is rejected for the original model. Our empirical results on the gender wage gap for Germany suggest that unobserved selection may be underestimated if no transformation is applied.

Suggested Citation

  • Biewen, Martin & Fitzenberger, Bernd & Seckler, Matthias, 2020. "Counterfactual quantile decompositions with selection correction taking into account Huber/Melly (2015): An application to the German gender wage gap," Labour Economics, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:labeco:v:67:y:2020:i:c:s0927537120301317
    DOI: 10.1016/j.labeco.2020.101927
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    6. Kenza Elass, 2022. "The multiple dimensions of selection into employment," French Stata Users' Group Meetings 2022 06, Stata Users Group.
    7. Kenza Elass, 2022. "The multiple dimensions of selection into employment," Working Papers hal-03788508, HAL.
    8. MA, Xinxin & CHENG, Jie, 2023. "The Impact of Trade Unions on the Gender Wage Gap : Evidence from China," Discussion Paper Series 752, Institute of Economic Research, Hitotsubashi University.
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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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