Volume 23, Number 3 (Summer) 1988
Neumark, David. 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination." Journal of Human Resources 23(3):279-295.
This paper considers the linkage of empirical estimates of wage discrimination between two groups, introduced by Oaxaca (1973), to a theoretical model of employers' discriminatory behavior. It is shown that, conditioned on different assumptions about employers' discriminatory tastes, Oaxaca's estimators of wage discrimination can be derived. That the approach is more generally useful is demonstrated by deriving an alternative estimator of wage discrimination, based on the assumption that within each type of labor (e.g., unskilled, skilled) the utility function capturing employers' discriminatory tastes is homogeneous of degree zero with respect to labor inputs from each of the two groups. The estimators are compared empirically in an application to male-female wage differentials.
The author is on the Board of Governors of the Federal Reserve System, Division of Research and Statistics. He would like to thank McKinley Blackburn, David Bloom, John Bound, Ronald Ehrenberg, Zvi Griliches, Reuven Gronau, George Johnson, Lawrence Matz, and an anonymous referee for helpful comments and suggestions. He takes responsibility for any remaining errors. The views expressed are those of the author and do not necessarily reflect the views of the Federal Reserve System or its staff. This material is based upon the first essay of the author's dissertation, for which he gratefully acknowledges the support of a National Science Foundation Graduate Fellowship.
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