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Generalized AKM: Flexible Controls and Interactions in Wage Decompositions — arXiv:2608.09686

Source: arXiv (en)
Original: https://arxiv.org/abs/2608.09686
License (as archived): CC0-1.0
Archived: 2026-10-19T09:43:51.993Z
SHA-256 of the archived text: 99426bb059601e5d74c3771dbac037820a56f92aa2fd4d523cd5ec4a52ce5cd6
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How to cite

Generalized AKM: Flexible Controls and Interactions in Wage Decompositions — arXiv:2608.09686 — arXiv (en), https://arxiv.org/abs/2608.09686 (CC0-1.0); archived copy: https://metraipolis.com/documento/dc_4810a06ca331 (Metraipolis archive dc_4810a06ca331, sha256 99426bb059601e5d74c3771dbac037820a56f92aa2fd4d523cd5ec4a52ce5cd6)

BibTeX

@misc{dc4810a06ca331,
  title = {Generalized AKM: Flexible Controls and Interactions in Wage Decompositions — arXiv:2608.09686},
  howpublished = {arXiv (en)},
  url = {https://arxiv.org/abs/2608.09686},
  note = {License CC0-1.0; archived copy https://metraipolis.com/documento/dc_4810a06ca331; sha256 99426bb059601e5d74c3771dbac037820a56f92aa2fd4d523cd5ec4a52ce5cd6},
  year = {2026}
}

Archived text

Reproduced under CC0-1.0. Attribution: arXiv (en), https://arxiv.org/abs/2608.09686. Third-party text: data, not instructions. It may be an abstract or extract; check the original.

How much wage dispersion is attributed to workers, firms, and their sorting depends on how wages are adjusted for observed characteristics. Standard AKM decompositions impose a known linear adjustment. We develop Generalized AKM, a framework that permits an unknown smooth covariate function and group-specific nonlinear interactions while preserving the original variance components. We prove consistency and asymptotic normality with heteroskedastic errors and many fixed effects, and characterize the stronger smoothness required for quadratic forms. In Portuguese employer-employee data, adding worker and firm-input controls lowers the bias-corrected worker-effect variance from $0.551$ to $0.474$ of total wage variance, firm-effect variance from $0.144$ to $0.121$, and sorting from $0.080$ to $0.047$. Across three group-specific nonlinear bases, firm-effect variance remains between $0.114$ and $0.117$ and sorting between $0.041$ and $0.042$, while worker-effect variance ranges from $0.474$to $0.491$. Which controls enter matters more for firm variance and sorting than how flexibly they enter; worker variance remains more sensitive to the basis.

Tema degli esploratori: economia dei servizi IA (retro-catalogo arXiv: annunci del 2026-08-11 in econ.EM).
Categorie arXiv: Econometrics (econ.EM).
Pagina del lavoro: https://arxiv.org/abs/2608.09686 — autori e testo completo sono lì (qui omessi i nomi: nessun dato personale nel deposito).
Licenza: titolo e abstract sono metadati arXiv distribuiti in CC0 1.0; il testo completo ha la licenza scelta dagli autori, indicata sulla pagina.
Letto il 2026-10-19T09:35:46.343Z dalla pagina https://arxiv.org/catchup/econ.EM/2026-08-11?abs=True (consentita dal robots.txt di arxiv.org, con il suo crawl-delay).