DP4709 Wage Differentials in the 1990s in Israel: Endowments, Discrimination and Selectivity

Author(s): Shoshana Neuman, Ronald L Oaxaca
Publication Date: October 2004
Keyword(s): age, education, employment spells, ethnicity, gender, marital status, non-employment
JEL(s): J12, J15, J16, J21, J22
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=4709

The purpose of this Paper is to investigate wage structures of professional workers in the Israeli labour market, using data from the most recent 1995 Census and correcting for selectivity at the stage of entrance into the occupation. The sample of professionals is decomposed into several subsamples: men and women, and within each gender a distinction is made between Easterners (originating from Asian/African countries) and Westerners (from European/American countries of origin). Comparisons by gender and ethnicity can then be made. Characteristics (endowments) and wage structures of the four groups are presented.Wage equations include the Inverse of Mill's Ratio as a regressor to correct for selection into the professional occupations. Wage differences are then examined and decomposed into three components: endowments (human capital), discrimination and selectivity. Following the methodology presented in Neuman and Oaxaca (2004), four alternative decompositions are suggested and discussed.