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Normalized Equation and Decomposition Analysis: Computation and Inference

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  • Yun, Myeong-Su

    ()
    (Tulane University)

Abstract

This paper joins discussions on normalized regression and decomposition equations in devising a simple and general algorithm for obtaining the normalized regression and applying it to the Oaxaca decomposition. This resolves the invariance problem in the detailed Oaxaca decomposition. An algorithm to calculate an asymptotic covariance matrix for estimates in the normalized regression for hypothesis testing is also derived. We extend these algorithms to non-linear equations where the underlying equation is linear and decompose differences in the first moment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1822.

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Length: 25 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1822

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Keywords: normalized regression; detailed decomposition; invariance; identification; characteristics effect; coefficients effect;

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  1. Greene, William H & Seaks, Terry G, 1991. "The Restricted Least Squares Estimator: A Pedagogical Note," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 563-67, August.
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  3. Suits, Daniel B, 1984. "Dummy Variables: Mechanics v. Interpretation," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 177-80, February.
  4. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  5. Edin, Per-Anders & Zetterberg, Johnny, 1992. "Interindustry Wage Differentials: Evidence from Sweden and a Comparison with the United States," American Economic Review, American Economic Association, American Economic Association, vol. 82(5), pages 1341-49, December.
  6. Myeong-Su Yun, 2005. "A Simple Solution to the Identification Problem in Detailed Wage Decompositions," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 43(4), pages 766-772, October.
  7. John P. Haisken-DeNew & Christoph M. Schmidt, 2000. "Interindustry and Interregion Differentials: Mechanics and Interpretation," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 516-521, August.
  8. Yun, Myeong-Su, 2003. "Decomposing Differences in the First Moment," IZA Discussion Papers 877, Institute for the Study of Labor (IZA).
  9. Abowd, John M & Killingsworth, Mark R, 1984. "Do Minority-White Unemployment Differences Really Exist?," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 2(1), pages 64-72, January.
  10. Robert W. Fairlie, 2003. "An Extension of the Blinder-Oaxaca Decomposition Technique to Logit and Probit Models," Working Papers, Economic Growth Center, Yale University 873, Economic Growth Center, Yale University.
  11. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, Econometric Society, vol. 56(2), pages 259-93, March.
  12. Even, William E. & Macpherson, David A., 1990. "Plant size and the decline of unionism," Economics Letters, Elsevier, Elsevier, vol. 32(4), pages 393-398, April.
  13. John Ham & Jan Svejnar & Katherine Terrell, 1998. "Unemployment and the Social Safety Net During Transitions to a Market Economy: Evidence from the Czech and Slovak Republic," William Davidson Institute Working Papers Series 169, William Davidson Institute at the University of Michigan.
  14. 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, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  15. Javier Gardeazabal & Aratza Ugidos, . "More on identification in detailed wage decompositions," Studies on the Spanish Economy 140, FEDEA.
  16. William E. Even & David A. Macpherson, 1993. "The Decline of Private-Sector Unionism and the Gender Wage Gap," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 279-296.
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Cited by:
  1. Carlos Gradin, 2009. "Why is Poverty So High Among Afro-Brazilians? A Decomposition Analysis of the Racial Poverty Gap," Journal of Development Studies, Taylor & Francis Journals, vol. 45(9), pages 1426-1452.
  2. Moral De Blas, Alfonso & Martín-Román, Ángel & Rodríguez Caballero, Juan Carlos, 2013. "El papel de las ETTs en la reducción del riesgo moral asociado al seguro por accidentes de trabajo: El caso de España/The Role of the TWAs in the Reduction of Moral Hazard in Workplace Accident Insu," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 31, pages 497-522, Septiembr.
  3. Moral De Blas, Alfonso & Martín Román, Ángel & Rodríguez Caballero, Juan Carlos, 2010. "La antigüedad y las diferencias de esfuerzo entre trabajadores de distintas zonas geográficas: un estudio de los accidentes de trabajo/Seniority and Relative Effort Exercised by Workers from Differe," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 28, pages 201 (20 pá, Abril.
  4. Albert López-Ibor, Rocío & Escot Mangas, Lorenzo & Fernández Cornejo, José Andrés, 2010. "La predisposición de las estudiantes universitarias a auto-limitarse profesionalmente en el futuro por razones de conciliación/The Predisposition of Feminine University Students to Professional Self," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 28, pages 203 (32 pá, Abril.
  5. Mihails Hazans & Ija Trapeznikova & Olga Rastrigina, 2008. "Ethnic and parental effects on schooling outcomes before and during the transition: evidence from the Baltic countries," Journal of Population Economics, Springer, Springer, vol. 21(3), pages 719-749, July.

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