# When is self-selection a problem? Mincer equation

I need help understanding this selection bias problem. I am estimating a mincer equation for a final year project and I was told I need to worry about self-selection bias IN OCCUPATIONS.

My lecturer said that, because wages vary between occupations, and individuals select occupations as a choice, the sample is selected. In that sense, I need to correct this problem. We were taught the Heckman selection model in the context of people deciding whether to work or not. I understand this case, but not the case of occupations. I mean, all is a choice, isn't? In my model I also have hours of work, public or private sector, full time or part time, region, industry, and other common variables. Why do we worry about occupations but not about everything else? I just cannot get my head around this.

Occupations are low, middle and high skill. I'm estimating the returns to education for Australian workers.

I think one thing is important, which is if the variable is included or not in the regression. For example, normally you cannot include a variable of employment or inactive, because inactive have no wage. This is why, as I understood from the lecture, we need to test for selection. But choice variables that are included, are they a concern?

• Do you know, for each observation of your sample, what occupation is about? Commented Aug 24, 2018 at 12:30
• To clarify a bit: What specifically is your primary hypothesis/what are you trying to use the Mincer equation to explain specifically? Returns to education and/or experience? Commented Aug 24, 2018 at 13:26
• It's low, middle and high skill. I'm estimating the returns to education for Australian workers. Commented Aug 24, 2018 at 14:31
• You’re right. All is a choice. The lecturer just chose to have you address selectivity in occupation. Why? Because people in the field are interested in the issue. That’s what I understand. Commented Aug 24, 2018 at 23:55