Estimation of Wage Equations in Australia: Allowing for Censored Observations of Labour Supply

Melbourne Institute Working Paper No. 08/02

Date: May 2002


Guyonne Kalb
Rosanna Scutella


This paper presents results for five separately estimated sets of participation and wage equations. The Australian working-age population is divided into sole parents, single men, single women, married men and married women. The approach in this paper takes the censoring of labour supply observations at 50 hours per week into account. The results for the wage equations are as anticipated with education, work experience and age increasing the expected wage. As expected, allowing for the censoring of labour supply reduces the predicted wage levels, particularly for married men who are most likely to work 50 hours or more.

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