Wage Differentials in the 1990s in Israel: Endowments, Discrimination, and Selectivity
Shoshana Neuman, Ronald L. Oaxaca
published in: International Journal of Manpower, 2005, 26(3), 217 - 236
The purpose of this paper is to investigate wage structures of professional workers in the
Israeli labor 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 (origination 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 3
components: Endowments (human capital), discrimination and selectivity. Following the
methodology presented in Neuman and Oaxaca (2004), four alternative decompositions are
suggested and discussed.
Text: See Discussion Paper No. 1362