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  • Thumbnail for AN APPROACH TO INCLUDE DISCRIMINATION ENDOGENOUSLY INTO THE MINCER’S EARNINGS EQUATION
    AN APPROACH TO INCLUDE DISCRIMINATION ENDOGENOUSLY INTO THE MINCER’S EARNINGS EQUATION by Pineros Liberato, Jairo Andres

    The latest release by the bureau of labor statistics shows an earning differential between men and women. According to the Bureau of Labor Statistics, in the third quarter of 2017, the median weekly earnings for men between 16 and 24 years was $27 higher than for women. The Mincer’s earnings function has constituted the basic workhorse in the study of the link between education, experience and earnings. Mincer’s earnings equation has been complemented by adding more predictors. However, one of the main predictors that plays a key role and has not been pinpointed is discrimination. This study aims to create an endogenous measure of discrimination that identifies marginalization of individuals in terms of gender, quantifying the impact of discrimination on earnings. To accomplish this goal, this paper executes a binomial probit by using data from the American Community Survey (ACS) for the years of 2000 and 2010. This study is in agreement with the literature in finding a large wage gap between the genders and the extent of the importance of education and experience, however, it also creates a measure of marginality that quantifies discrimination and it shows that for certain occupations the market tends to fix the initial disadvantage by rewarding the marginalized individuals in a larger magnitude for an extra year of education and experience.