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More on Identification in Detailed Wage Decompositions

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Author Info
Javier Gardeazabal (The University of the Basque Country)
Arantza Ugidos (The University of the Basque Country)

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Abstract

Wage decompositions are often used to decompose wage differentials of two demographic groups into differences in characteristics and differences in returns to those characteristics. The latter part is used as an estimate of the degree of discrimination. A problem with this approach is that the contributions of individual dummy variables to the wage decomposition are not identified. This note proposes a simple solution to the identification problem. The solution is illustrated with an empirical application to Spanish labor market data. Copyright (c) 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdfplus/10.1162/0034653043125239
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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 86 (2004)
Issue (Month): 4 (04)
Pages: 1034-1036
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Handle: RePEc:tpr:restat:v:86:y:2004:i:4:p:1034-1036

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  1. Judith Fields & Edward N. Wolff, 1995. "Interindustry wage differentials and the gender wage gap," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 49(1), pages 105-120, October.
  2. 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. [Downloadable!] (restricted)
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  3. 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. [Downloadable!] (restricted)
  4. William C. Horrace & Ronald L. Oaxaca, 2001. "Inter-industry wage differentials and the gender wage gap: An identification problem," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 54(3), pages 611-618, April.
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  1. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," IREA Working Papers 200808, University of Barcelona, Research Institute of Applied Economics, revised Jun 2008. [Downloadable!]
  2. Carlos Gradín, 2007. "Why Is Poverty So High Among Afro-Brazilians? A Decomposition Analysis of the Racial Poverty Gap," IZA Discussion Papers 2809, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Kelly, Eilish & McGuinness, Seamus & O'Connell, Philip, 2009. "Benchmarking, Social Partnership and Higher Remuneration: Wage Settling Institutions and the Public-Private Sector Wage Gap in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(3), pages 339–370. [Downloadable!]
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  4. Myeong-Su Yun, 2006. "Revisiting Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem," IZA Discussion Papers 2427, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," Economics of Education Working Paper Series 0028, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
  6. Hipólito Simón & Esteban Sanromá & Raúl Ramos, 2008. "Labour segregation and immigrant and native-born wage distributions in Spain: an analysis using matched employer–employee data," Spanish Economic Review, Springer, vol. 10(2), pages 135-168, June. [Downloadable!] (restricted)
  7. 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. [Downloadable!]
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  8. Laia Castany & Enrique Lopez-Bazo & Rosina Moreno, 2007. "Decomposing differences in total factor productivity across firm size," IREA Working Papers 200705, University of Barcelona, Research Institute of Applied Economics, revised Mar 2007. [Downloadable!]
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  9. Madden, D, 2008. "Gender Differences in Mental Well- Being: A Decomposition Analysis," Health, Econometrics and Data Group (HEDG) Working Papers 08/08, HEDG, c/o Department of Economics, University of York. [Downloadable!]
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  10. Ira N. Gang & Robert C. Stuart & Myeong-Su Yun, 2006. "Wage Growth and Inequality Change During Rapid Economic Transition," Departmental Working Papers 200631, Rutgers University, Department of Economics. [Downloadable!]
  11. Nils Braakmann, 2009. "The Role of Psychological Traits for the Gender Gap in Full-time Employment and Wages: Evidence from Germany," SOEPpapers 162, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  12. Myeong-Su Yun, 2005. "Normalized Equation and Decomposition Analysis: Computation and Inference," IZA Discussion Papers 1822, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Ricardo Pagán & Miguel Malo, 2009. "Job satisfaction and disability: lower expectations about jobs or a matter of health?," Spanish Economic Review, Springer, vol. 11(1), pages 51-74, March. [Downloadable!] (restricted)
  14. Carlos Gradin, 2008. "Poverty among minorities in the United States: Explaining the racial poverty gap for Blacks and Latinos," Working Papers 96, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
  15. McGuinness, Seamus & Kelly, Elish & O'Connell, Philip J., 2008. "The Impact of Wage Bargaining Regime on Firm-Level Competitiveness and Wage Inequality: The Case of Ireland," Papers WP266, Economic and Social Research Institute (ESRI). [Downloadable!]
  16. Wu, Ya & Escalante, Cesar & Gunter, Lewell F. & Epperson, James E., 2009. "A Decomposition Approach To Analyzing Racial And Gender Biases," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49308, Agricultural and Applied Economics Association. [Downloadable!]
  17. Madden, D, 2008. "An Analysis of Mental Stress in Ireland, 1994-2000," Health, Econometrics and Data Group (HEDG) Working Papers 08/07, HEDG, c/o Department of Economics, University of York. [Downloadable!]
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