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A computational trick for calculating the Blinder-Oaxaca decomposition and its standard error

Author

Listed:
  • Peter Kennedy

    (Simon Fraser University)

  • Jutta Heinrichs

    (Associated Economic Consultants)

Abstract

To compute the Blinder-Oaxaca decomposition and associated standard errors a practitioner needs to be comfortable using vector and matrix software manipulations. This paper proposes a computational trick for producing these computations by running an artificial regression.

Suggested Citation

  • Peter Kennedy & Jutta Heinrichs, 2007. "A computational trick for calculating the Blinder-Oaxaca decomposition and its standard error," Economics Bulletin, AccessEcon, vol. 3(66), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-07c00003
    as

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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume3/EB-07C00003A.pdf
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    References listed on IDEAS

    as
    1. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    2. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    3. Salkever, David S., 1976. "The use of dummy variables to compute predictions, prediction errors, and confidence intervals," Journal of Econometrics, Elsevier, vol. 4(4), pages 393-397, November.
    4. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    Cited by:

    1. Essama-Nssah, B., 2012. "Identification of sources of variation in poverty outcomes," Policy Research Working Paper Series 5954, The World Bank.
    2. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 453-479, December.
    3. Ben Jann, 2008. "A Stata implementation of the Blinder-Oaxaca decomposition," ETH Zurich Sociology Working Papers 5, ETH Zurich, Chair of Sociology, revised 14 May 2008.

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    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General

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