This paper is divided into two parts, the first part establishes an earnings function for entry-level college-graduate workers; the second estimates worker wage differentials by sex and by education level. In the first part, we adopt the human capital model, along with the hedonic model and the extended hedonic model, and by applying the OLS and Heckman two-stage methods to estimate the earnings function. In the second part, we utilize Oaxaca(1973), Dolton & Makepeace(1986) and Cotton’s (1988) decomposition methodology to estimate worker wage differentials.
The data that we used came from the Survey of Employment of College Graduates for 1984 and 1985, which was conducted by the Chung-Hua Institution for Economic Research(CIER). The survey focuses on recent college graduates who had graduated at least eight months prior to the time of survey but not more than twenty months. The empirical results are as would be expected and are also significant.
