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    Measuring Wage Inequality in the Airline Industry

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    Research how wage inequality is measured and if it is present in the airline industry.

    - Are there any current or past news events related to wage inequality in this industry? Explain.

    - What was the industry's method for determining that there was an inequality? Explain.

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    STEP 1
    How is wage inequality measured?
    One of the most common methods is the Theil measure and the other method is the Gini index (Gini Coefficient).
    This material is taken from the website: http://ftp.iza.org/"Accordingly, the basic specification of our empirical estimation equation is
    INEQit = b0 + b1FDI + b2FDI2 + b3X + ui + λt+ eit (2) where INEQ is a measure of wage inequality in country i at time t, FDI measures inward foreign direct investment as a percentage of GDP in the country, X is a vector of control variables also assumed to be correlated with inequality, u is a country specific effect, λ a full set of time dummies and e is the remaining white noise error term. We deal with the presence of unobserved heterogeneity across countries by employing a fixed effect (within transformation) estimator which purges the country-specific effect. The quadratic term for FDI is included in order to allow for the non-linearity suggested by the theoretical framework." ...

    Solution Summary

    This solution looks at the measure of wage inequality in the airline industry. It specifically identifies issues with deregulation and how there has been an increase in inter-firm wage inequality between pilots. This solution is 546 words with three references.