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Labor economists studying the determinants of women’s earnings discovereda puzzling empirical result. Using randomly selected employedwomen, they regressed earnings on the women’s number of children anda set of control variables (age, education, occupation, and so forth). Theyfound that women with more children had higher wages, controlling forthese other factors. Explain how sample selection might be the cause ofthis result. (Hint: Notice that women who do not work outside the homeare missing from the sample.) [This empirical puzzle motivated JamesHeckman’s research on sample selection that led to his 2000 Nobel Prizein Economics. See Heckman (1974).]

Labor economists studying the determinants of women’s earnings discovereda puzzling empirical result. Using randomly selected employedwomen, they regressed earnings on the women’s number of children anda set of control variables (age, education, occupation, and so forth). Theyfound that women with more children had higher wages, controlling forthese other factors. Explain how sample selection might be the cause ofthis result. (Hint: Notice that women who do not work outside the homeare missing from the sample.) [This empirical puzzle motivated JamesHeckman’s research on sample selection that led to his 2000 Nobel Prizein Economics. See Heckman (1974).]

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.8P
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Labor economists studying the determinants of women’s earnings discovered
a puzzling empirical result. Using randomly selected employed
women, they regressed earnings on the women’s number of children and
a set of control variables (age, education, occupation, and so forth). They
found that women with more children had higher wages, controlling for
these other factors. Explain how sample selection might be the cause of
this result. (Hint: Notice that women who do not work outside the home
are missing from the sample.) [This empirical puzzle motivated James
Heckman’s research on sample selection that led to his 2000 Nobel Prize
in Economics. See Heckman (1974).]

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