The Wage Curve, Once More with Feeling: Bayesian Model Averaging of Heckit Models

Rolando Gonzales Martínez

doi:10.33119/ERFIN.2018.3.2.1

Rolando Gonzales Martínez School of Business and Law, University of Agder, Norway

DOI: https://doi.org/10.33119/ERFIN.2018.3.2.1

Keywords: Model Uncertainty, Bayesian Model Averaging, Wage Curve

Abstract

The sensitivity of the wage curve to sample-selection and model uncertainty was evaluated with Bayesian methods. More than 8000 Heckit wage curves were estimated using data from the 2017 household survey of Bolivia. After averaging the estimates with the posterior probability of each model being true, the wage curve elasticity in Bolivia is close to -0.01. This result suggests that in this country the wage curve is inelastic and does not follow the international statistical regularity of wage curves.

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