Additive Decompositions with Interaction Effects
AbstractThis paper proposes a comprehensive, path-independent decomposition formula of changes into ceteris paribus effects and interaction effects. The formula implies a reassessment of sequential decomposition methods that are widely used in the literature and that are restrictive in how they treat interaction effects. If counterfactual outcomes are correctly specified, it may also be viewed as a description of certain aspects of causality in the situation where more than one causal influence is present.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6730.
Length: 29 pages
Date of creation: Jul 2012
Date of revision:
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Find related papers by JEL classification:
- 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
- C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
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