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An Extension of the Blinder-Oaxaca Decomposition to Non-Linear Models

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  • Thomas Bauer

    ()

  • Mathias Sinning

    ()

Abstract

In this paper, a general Blinder-Oaxaca decomposition is derived that can also be applied to non-linear models, which allows the differences in a non-linear outcome variable between two groups to be decomposed into a part that is explained by differences in observed characteristics and a part attributable to differences in the estimated coeffcients. Departing from this general model, we show how it can be applied to different models with discrete and limited dependent variables.

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File URL: http://repec.rwi-essen.de/files/DP_06_049.pdf
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Bibliographic Info

Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung in its series RWI Discussion Papers with number 0049.

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Length: 18 pages
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:rwi:dpaper:0049

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Keywords: Blinder-Oaxaca decomposition; non-linear models;

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References

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  1. Thomas Bauer & Mathias Sinning, 2005. "The Savings Behavior of Temporary and Permanent Migrants in Germany," RWI Discussion Papers 0029, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  2. Yun, Myeong-Su, 2003. "Decomposing Differences in the First Moment," IZA Discussion Papers 877, Institute for the Study of Labor (IZA).
  3. Thomas Bauer & Mathias Sinning, 2005. "Blinder-Oaxaca Decomposition for Tobit Models," RWI Discussion Papers 0032, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  4. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  5. 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.).
  6. Bauer, Thomas K. & Göhlmann, Silja & Sinning, Mathias, 2006. "Gender Differences in Smoking Behavior," IZA Discussion Papers 2259, Institute for the Study of Labor (IZA).
  7. 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, vol. 14(3), pages 693-709, October.
  8. 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.
  9. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  10. Fitzenberger, Bernd & Kohn, Karsten & Wang, Qingwei, 2006. "The Erosion of Union Membership in Germany: Determinants, Densities, Decompositions," ZEW Discussion Papers 06-66, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
  12. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January.
  13. 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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