THE REVERSE REGRESSION PROBLEM - STATISTICAL PARADOX OR ARTIFACT OF MISSPECIFICATION

The usual approach to wage discrimination asks whether certain individ uals receive lower wages for the same level of productivity characteri stics. The reverse approach asks whether these individuals are more pr oductive given the same wages. When these hypotheses are tested, incom patible conclusions seem to result. To circumvent specification proble ms, non-parametric techniques were used to estimate Canadian male-fema le wage/experience profiles. The findings indicate that, when the corr ect functional form is specified and the effects of childrearing activ ities are controlled for, there exists a wage/experience gap favouring men regardless of the approach, suggesting that the paradox may be si mply an artefact of misspecification.