Katz-Murphy prediction model for the college-high school wage gap
Source: Reproduced from Acemoglu and Autor (2012, Figure 1) March CPS data for earnings years 1963–2008. Log weekly wages for full-time, full-year workers are regressed in each year on four education dummies (high school dropout, some college, college graduate, greater than college), a quartic in experience, interactions of the education dummies and experience quartic and two race categories (black, nonwhite other). The composition-adjusted mean log wage is the predicted log wage evaluated for whites at the relevant experience level (5, 15, 25, 35, 45 years) and relevant education level (high school dropout, high school graduate, some college, college graduate, greater than college). The mean log wage for college and high school is the weighted average of the relevant composition adjusted cells using a fixed set of weights equal to the average employment share of each group. The ratio of mean log wages for college and high school graduates for each year is plotted. See Data Appendix for more details on treatment of March CPS data. The Katz-Murphy predicted wage gap are predicted values from a regression of the college/high-school wage gap on time trend term and log labor supply, as measured in efficiency units, for years 1963–1987
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