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American Economic Review: Vol. 101 No. 3 (May 2011)


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Applying Fixed Effects to Hierarchical Segregation Models

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Shatnawi, Dina, Ronald Oaxaca, and Michael Ransom. 2011. "Applying Fixed Effects to Hierarchical Segregation Models." American Economic Review, 101(3): 588-92.

DOI: 10.1257/aer.101.3.588


This paper expands the empirical implementation of hierarchical segregation models to allow for the use of panel methods. We use firm level data collected between 1977 and 1985 from a regional grocery store that faced a title VII class-action lawsuit over gender discrimination much the same as Wal-Mart and Costco. Special problems arise in implementing decompositions in a fixed effects and random effects setting, especially when analyzing wage-level differences. We develop a variation of wage decompositions that takes into consideration an unbalanced design and extends the literature by explicitly formalizing the inclusion of the unobserved heterogeneous effects.

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Shatnawi, Dina (Naval Postgraduate School, Monterey, CA)
Oaxaca, Ronald (U AZ)
Ransom, Michael (Brigham Young U)

JEL Classifications

J16: Economics of Gender; Non-labor Discrimination
J31: Wage Level and Structure; Wage Differentials
J71: Labor Discrimination
J81: Labor Standards: Working Conditions

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