Within this project, I examined the influence of different determinants on the hourly wages of Austrian employees. As a basis, I used a workhorse in Labour Economics, the Mincer Equation. I also extended the model by determinants that seem country specifically important for Austria according to previous literature: the gender gap and the east-west divide. However, first I test how good the original equation describes the data (EU SILC 2007) for Austria more than thirty years after its publication. Implying my new variables, I find that women earn about 26.2% less than men which results in a very big gender gap compared to other developed countries in the European Union. Surprisingly, I could not find any significant difference for the nine federal states which rejects my hypothesis of an east-west divide. Furthermore, the additional income due to increasing experience seems to be nearly linear as the impact of the squared term is extremely small.
Table of Contents
1 Introduction
2 Literature
3 Data
4 Models
5 Results
5.1 Model 1
5.2 Model 2
5.3 Model 3
6 Conclusion
7 Appendix
Objectives and Research Focus
This project investigates the income structure of full-time employees in Austria by applying the Mincer Equation to 2007 EU-SILC data. The primary objective is to determine how effectively the original Mincer model, introduced over three decades ago, explains contemporary Austrian wage data, while specifically examining the impact of gender and the potential influence of an east-west regional divide on income levels.
- Application of the Mincer Equation to Austrian labor market data.
- Analysis of the gender wage gap among Austrian employees.
- Evaluation of regional income disparities across Austrian federal states.
- Examination of returns to different types of high school diplomas and education levels.
- Comparison of OLS, Robust, and GLS estimation results.
Excerpt from the Book
1 Introduction
My intention was to investigate the income structure of full-time employees in Austria based on the returns to schooling. I also focused on the so-called "gender gap", i.e. whether there are differences in the income of male and female workers. Due to historical reasons, I also controlled for the so-called "east-west divide in Austria" by looking at the effect of the individual Austrian federal states. For this study, the Mincer Equation comes in handy as a tool of analysis. The Mincer Equation is an empirical model which was introduced by Jacob Mincer in 1974, originally called "The Human Capital Earnings Function". Mincer’s work had a vast and lasting influence on the field of empirical labour economics. It was the first and most popular model of investment in human capital examining changes in an individuals income by considering its education and its experience (Lemieux, 2003).
For this project, I test slightly different forms of the original Mincer Equation. First of all, I want to see how well the original Mincer equation describes the data 35 years after it was introduced. Within the explanatory variable Education I also want to look at the difference between the different types of High School Diplomas. Austria is one of the last countries that still offers Vocational High Schools that last one year longer (13 years of schooling total) in comparison to "General High Schools" that last 4 years (12 years total). The rest of the models include a sex-variable to control for gender specific income differences. In the third model I included the federal state to examine the east-west divide of incomes in Austria.
Summary of Chapters
1 Introduction: Outlines the research intention to apply the Mincer Equation to Austrian wage data, focusing on gender gaps and regional disparities.
2 Literature: Reviews existing studies on the Austrian gender wage gap, returns to education, and historical economic characteristics of Austrian regions.
3 Data: Describes the 2007 EU-SILC dataset used for the analysis, providing descriptive statistics for variables like education, experience, sex, and federal states.
4 Models: Defines the mathematical specifications for the three models used to estimate log hourly wages, acknowledging issues like heteroskedasticity and endogeneity.
5 Results: Presents and interprets the findings from the three model estimations, comparing different statistical methods and testing for significance.
6 Conclusion: Summarizes the key findings, including the significant gender pay gap and the absence of a strong east-west income divide in the data.
7 Appendix: Provides detailed regression tables (1-4) summarizing the results of the OLS, Robust, and GLS estimations.
Keywords
Mincer Equation, Austria, Labour Economics, Gender Gap, Wage Structure, EU-SILC, Returns to Education, OLS Regression, Human Capital, East-West Divide, Hourly Wages, Empirical Analysis, Vocational Training, Income Disparity, Statistics Austria
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the income structure of full-time employees in Austria using the Mincer Equation to analyze how various factors, such as education, experience, and gender, influence hourly wages.
What are the primary topics addressed?
The research focuses on the gender wage gap, the economic impact of different education levels and high school diplomas, and the potential existence of an east-west income divide between Austrian federal states.
What is the central research question?
The research asks how well the original Mincer Equation, developed in 1974, describes the 2007 Austrian labor market and what specific socioeconomic factors contribute to wage variations within this context.
Which scientific methodology is employed?
The author uses empirical labor economics methods, specifically estimating different versions of the Mincer wage equation using OLS, Robust standard errors, and GLS regression models.
What content is covered in the main section of the paper?
The main section details the model specifications, provides descriptive statistics of the EU-SILC dataset, and discusses the econometric results of three distinct models alongside relevant theoretical literature.
Which keywords characterize this work?
Key terms include Mincer Equation, Austria, Labour Economics, Gender Gap, Human Capital, and Wage Structure.
Did the author find evidence for an east-west income divide in Austria?
Surprisingly, the results indicate that the federal states do not contribute significantly to the explanation of income differences, thereby rejecting the hypothesis of a strong east-west income divide.
How does the gender gap in Austria compare to other countries?
The study finds a significant gender gap, with women earning approximately 26.2% less than men, noting that this gap is notably larger than in most other developed European Union countries.
What is the conclusion regarding different types of high school diplomas?
The research concludes that there is no statistically significant difference in expected wage outcomes based on whether an individual graduated from a General High School or a Specified High School.
- Citation du texte
- Katharina Bergant (Auteur), 2014, The Mincer Equation. The Gender Gap in Austria, Munich, GRIN Verlag, https://www.grin.com/document/299953
