Wage Functions for Demographic Groups in Australia

This paper reports estimates of wage equations for groups of Australian workers, using pooled data from the Income Distribution Surveys for 1995 and 1996, the first two years for which continuous hours information is available for each individual. The problem of using the wage functions to assign a wage rate to non-workers, which is needed in the context of labour supply analysis, is also examined. Special attention is given to the case where the wage equation includes variables that are not available for the unemployed. The use of extraneous information about the occupation and industry characteristics of the unemployed is recommended.