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Does measurement error bias fixed-effects estimates of the union wage effect?

Swaffield, J.K. (2001) Does measurement error bias fixed-effects estimates of the union wage effect? Oxford Bulletin of Economics and Statistics, 63 (4). pp. 437-457. ISSN 0305-9049

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This paper compares estimates of the union wage effect using cross-section and panel estimators for male manual full-time and female employees using data from the British Household Panel Survey, 1991-1997. A comparison of cross-section and panel estimates suggests that unobserved heterogeneity biases cross-section estimates upwards. However, it is also found that the divergence between estimates is overstated because measurement error biases the fixed-effects estimates downward. Reducing measurement error in the union variable by taking averages and restricting changes in union status to occur only when a change in employer and/or job takes place increases fixed-effects estimates of the union wage effect.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > Economics and Related Studies (York)
Depositing User: York RAE Import
Date Deposited: 07 Apr 2009 11:28
Last Modified: 07 Apr 2009 11:28
Published Version: http://dx.doi.org/10.1111/1468-0084.00228
Status: Published
Publisher: Blackwell Publishing
Identification Number: 10.1111/1468-0084.00228
URI: http://eprints.whiterose.ac.uk/id/eprint/7144

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