Question

How do economists use regression analysis of wage equations to test for discriminations (a graphical analysis is strongly encouraged)? Explain the benefits and drawbacks of including occupation in the regression equations.

Answer 1

Approach to examine wage discrimination is a simple regression of log earnings or wages on individual worker attributes with the inclusion of group dummy variable or using a more complex specification where the return of specific attributes vary by group status.

Four major national represented data have been used to examine these wage equations - the deccenial census, the census pouolqtion survey, national longitudinal survey of youth and panel survey of income Dynamics.