Is the Israeli Labor Market Segmented? Revisiting the Mixture Regression Model

We use a mixture regression model to identify segmentation in the Israeli labor market, and propose a new method for assigning workers to simulated segments. We identified a lowwage segment and a high-wage segment, as well as a third segment with a large wage variability that we interpret as “noisy” observations. We found quantitatively small but qualitatively reasonable differences in workers’ characteristics between the low-wage and high-wage segments, while the coefficient differences were much larger, indicating that much of the wage disparity in Israel is due to unobserved factors rather than to observable characteristics. Some policy-relevant insights are derived.


Issue Date:
2013
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/164512
Page range:
2-25
Total Pages:
25
JEL Codes:
J31; C30




 Record created 2017-04-01, last modified 2017-08-27

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