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More on Identification in Detailed Wage Decompositions

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  • Javier Gardeazabal

    (The University of the Basque Country)

  • Arantza Ugidos

    (The University of the Basque Country)

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. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/0034653043125239
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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 86 (2004)
Issue (Month): 4 (November)
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. Ronald Oaxaca, . "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
  2. 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, Cornell University, ILR School, vol. 54(3), pages 611-618, April.
  3. Judith Fields & Edward N. Wolff, 1995. "Interindustry wage differentials and the gender wage gap," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(1), pages 105-120, October.
  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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