Decomposing wage variation: a comment on Michael P. Keane's “Individual heterogeneity and interindustry wage differentials”.
Keane (1993) uses panel data to control for the effects of time-invariant individual characteristics when estimating the effects of industry on wages. He concludes that these individual effects can account for 84 percent of the industry-associated variation found in typical cross-section studies....
| Publicado en: | Journal of Human Resources Vol. 30; pp. 853 - 861 |
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| Autor principal: | |
| Formato: | Artículo |
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University of Wisconsin Press
Fall95
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| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Keane (1993) uses panel data to control for the effects of time-invariant individual characteristics when estimating the effects of industry on wages. He concludes that these individual effects can account for 84 percent of the industry-associated variation found in typical cross-section studies. I argue that this conclusion is based on a misleading wage variance decomposition that would tend to overstate the importance of individual effects. A reconsideration of Keane's results shows that his estimates are of a similar magnitude to those of earlier studies that attempt to control for individual ability. Reprinted by permission of the publisher. |
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