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A Stata implementation of the Blinder-Oaxaca decomposition

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Author Info
Ben Jann ()

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Abstract

The counterfactual decomposition technique popularized by Blinder (1973) and Oaxaca (1973) is widely used to study mean outcome differences between groups. For example, the technique is often used to analyze wage gaps by sex or race. The present paper summarizes the technique and addresses a number of complications such as the identification of effects of categorical predictors in the detailed decomposition or the estimation of standard errors. A new Stata command called -oaxaca- is introduced and examples illustrating its usage are given.

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File URL: http://repec.ethz.ch/rsc/ets/wpaper/jann_oaxaca.pdf
File Format: application/pdf
File Function: Revised version, 2008
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Publisher Info
Paper provided by ETH Zurich, Chair of Sociology in its series ETH Zurich Sociology Working Papers with number 5.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 25 pages
Date of creation: 05 May 2008
Date of revision: 14 May 2008
Handle: RePEc:ets:wpaper:5

Contact details of provider:
Web page: http://www.socio.ethz.ch/

For technical questions regarding this item, or to correct its listing, contact: (Ben Jann).

Related research
Keywords: Stata; Blinder-Oaxaca decomposition; outcome differential; wage gap;

Other versions of this item:

Find related papers by JEL classification:
C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Eric S. Lin, 2007. "On the standard errors of Oaxaca-type decompositions for inter-industry gender wage differentials," Economics Bulletin, Economics Bulletin, vol. 10(6), pages 1-11. [Downloadable!]
  2. John P. Haisken-DeNew & Christoph M. Schmidt, . "Inter-Industry and Inter-Region Differentials: Mechanics and Interpretation," Working Papers 9504, SELAPO Center for Human Resources. [Downloadable!]
  3. Nielsen, Helena Skyt, 2000. "Wage Discrimination in Zambia: An Extension of the Oaxaca-Blinder Decomposition," Applied Economics Letters, Taylor and Francis Journals, vol. 7(6), pages 405-08, June. [Downloadable!] (restricted)
  4. Dolton, P J & Makepeace, G H, 1986. "Sample Selection and Male-Female Earnings Differentials in the Graduate Labour Market," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 317-41, July. [Downloadable!] (restricted)
  5. John Hendrickx, 2000. "Using categorical variables in Stata," Stata Technical Bulletin, StataCorp LP, vol. 9(52). [Downloadable!]
  6. Shoshana Neuman & Ronald Oaxaca, 2004. "Wage Decompositions with Selectivity-Corrected Wage Equations: A Methodological Note," Journal of Economic Inequality, Springer, vol. 2(1), pages 3-10, April. [Downloadable!] (restricted)
  7. Doris Weichselbaumer & Rudolf Winter-Ebmer, 2003. "A meta-analysis of the international gender wage gap," Economics working papers 2003-11, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
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  8. 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.
  9. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers 227, Board of Governors of the Federal Reserve System (U.S.).
  10. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May. [Downloadable!] (restricted)
  11. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, 04. [Downloadable!] (restricted)
    Other versions:
  12. Jackson, John D & Lindley, James T, 1989. "Measuring the Extent of Wage Discrimination: A Statistical Test and a Caveat," Applied Economics, Taylor and Francis Journals, vol. 21(4), pages 515-40, April.
  13. Kennedy, Peter, 1986. "Interpreting Dummy Variables," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 174-75, February. [Downloadable!] (restricted)
  14. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November. [Downloadable!] (restricted)
  15. Shrestha, Keshab & Sakellariou, Chris, 1996. "Wage Discrimination: A Statistical Test," Applied Economics Letters, Taylor and Francis Journals, vol. 3(10), pages 649-51, October. [Downloadable!] (restricted)
  16. 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)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mohamad Fahmi, 2009. "School Choice and Earnings: A Case of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 200914, Department of Economics, Padjadjaran University, revised Sep 2009. [Downloadable!]
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