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Decomposition of the Gender Wage Gap using the LASSO Estimator

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  • René Böheim
  • Philipp Stöllinger

Abstract

We use the LASSO estimator to select among a large number of explanatory variables in wage regressions for a decomposition of the gender wage gap. The LASSO selection with a one standard error rule removes about a quarter of the regressors. We use the LASSO-selected regressors for OLSbased gender wage decompositions. This approach results in a smaller error variance than in OLS without LASSO-selection. The explained gender wage gap is 1%-point greater than in the conventional OLS model.

Suggested Citation

  • René Böheim & Philipp Stöllinger, 2020. "Decomposition of the Gender Wage Gap using the LASSO Estimator," Economics working papers 2020-03, Department of Economics, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:econwp:2020-03
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    Cited by:

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    2. Ahrens, Achim & Hansen, Christian B. & Schaffer, Mark E & Wiemann, Thomas, 2024. "Model Averaging and Double Machine Learning," IZA Discussion Papers 16714, Institute of Labor Economics (IZA).
    3. Olga Takács & János Vincze, 2023. "Where is the pain the most acute? The market segments particularly affected by gender wage discrimination in Hungary," CERS-IE WORKING PAPERS 2304, Institute of Economics, Centre for Economic and Regional Studies.

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    More about this item

    Keywords

    gender wage gap; LASSO; decomposition;
    All these keywords.

    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

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