Distributional Wage CDF Shift
RCTReview
Evaluating average wage returns from labor market programs can mask underlying distributional skewness, making it unclear whether mean wage gains reflect broad-based economic improvement or isolated outlier gains among a few high earners.
Picture this
Imagine a whole class of students taking an exam where instead of just one top student getting an A+ while everyone else fails, the grades of every single student move up by one letter grade. Comparing the complete curve of scores before and after proves that the improvement helped everyone across the board rather than boosting only the highest performer.
What the evidence says
Daily wage gains reflect a uniform rightward shift in the overall earnings distribution for individuals receiving job opportunities, proving that the $3.83 to $4.19 daily wage increase (p < 0.05) represents broad-based income growth rather than outlier-driven mean distortions.
- Who was studied
- N = 227 urban male youth job seekers in Lilongwe, Malawi.
- How
- Cumulative Distribution Function (CDF) comparison of 8-month post-intervention daily wages across treatment probabilities (0%, uncertain outside options, and guaranteed outside options) and job attainment types (earned job, lottery job, no job).
What to do
Plot and evaluate cumulative distribution functions of post-program earnings to confirm that average intervention effects represent broad-based wage increases.
From the source
"These wage impacts do not appear to be concentrated among a few individuals; rather, we see a distributional shift among those acquiring the short-term work experience opportunity."
b23e842f-67cd-47d7-9b15-b6b6c8e557a2-Employment Exposure- Employment and Wage Effects in Urban Malawi.pdf