Publication and Attenuation Biases in Measuring Skill Substitution

By:

Havranek, Tomas

Contributor(s):

Material type:

Continuing resourcePublication details: The Review of Economics and Statistics; 2024Description: 1187-1200ISSN:

0034-6535

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Online resources:

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Summary: A key parameter in the analysis of wage inequality is the elasticity of substitution between skilled and unskilled labor. We show that the empirical literature is consistent with both publication and attenuation bias in the estimated inverse elasticities. Publication bias, which exaggerates the mean reported inverse elasticity, dominates and results in corrected inverse elasticities closer to zero than the typically published estimates. The implied mean elasticity is 4, with a lower bound of 2. Elasticities are smaller for developing countries. To derive these results, we use nonlinear tests for publication bias and model averaging techniques that account for model uncertainty.

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Item type	Current library	Call number	Vol info	Status	Date due	Barcode
Article Index	Dr VKRV Rao Library		Vol. 106, No. 5	Not for loan		AI848

A key parameter in the analysis of wage inequality is the elasticity of substitution between skilled and unskilled labor. We show that the empirical literature is consistent with both publication and attenuation bias in the estimated inverse elasticities. Publication bias, which exaggerates the mean reported inverse elasticity, dominates and results in corrected inverse elasticities closer to zero than the typically published estimates. The implied mean elasticity is 4, with a lower bound of 2. Elasticities are smaller for developing countries. To derive these results, we use nonlinear tests for publication bias and model averaging techniques that account for model uncertainty.

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