Estimating wage functions and wage discrimination using data from the 1995Swiss labour force survey: a double-selectivity approach

The data from the Swiss Labour Force Survey (SAKE) have been widely used to estimate wage functions, which in turn have been applied for the determina tion of wage discrimination between genders. One serious problem with the S AKE data is that about 17 per cent of employed individuals did not report w ages. Those studies which use the SAKE data to estimate wage functions simp ly ignore these non-respondents. Such an approach could lead to a serious s electivity bias if the response decision is not purely random In this study this issue is analysed in a double-selectivity framework, in which both th is response decision and the usual market-participation decision are modell ed. Although the response decision can be partially explained by certain so cio-economic variables, a large degree of randomness/unexplained variation exists. The authors therefore conclude that, in the absence of a better mod el, the standard approach at estimating wage functions (i.e. only correctin g for the selectivity bias arising from women's participation decision) is the most appropriate one.