When empirically identifying a priori occupational or industrial labour market segmentation, truncation bias results in which of the following?

Question

Quizplus · Accepted Answer

Truncation bias in the context of labor market segmentation, particularly when empirically identifying a priori occupational or industrial segments, can lead to artificially lower estimated returns to education in the secondary sector. This is because truncation bias often results from the exclusion of certain observations from the analysis, which can disproportionately affect the estimated outcomes in segmented labor markets, especially in the secondary sector where lower wages and less stable employment conditions are more common.

When Empirically Identifying a Priori Occupational or Industrial Labour Market