Predicting gross wages of non-employed persons in Croatia

• Main Authors: Slavko Bezeredi, Ivica Urban
• Format: Article
• Language: English
• Published: Institute of Public Finance 2016-03-01
• Series: Financial Theory and Practice
• Subjects: gross wages; estimation; prediction; unemployed; inactive; Heckman selection model; quantile regressions; Croatia
• Online Access: http://fintp.ijf.hr/upload/files/ftp/2016/1/bezeredi_urban.pdf
• ISSN: 1845-9757

We present the findings of a study aimed at building a model for predicting wages of non-employed persons in Croatia. The predictions will be used in the calculation of marginal effective tax rate at the extensive margin and in labour supply modelling. The database used is 2012 “EU statistics on income and living conditions”. The paper comprehensively explains the data source, variables, subgroups of employed and non-employed, and the results of the linear regression model, the Heckman selection model and the quantile regression model. The quality of predictions obtained by different models is compared and discussed.