On the standard errors of Oaxaca-type decompositions for inter-industry gender wage differentials
Horrace and Oaxaca (2001) treat the regressors in gender wage gap by industry measures as non-stochastic when computing the corresponding standard errors. However, the non-stochastic regressors assumption is thought to be inappropriate in modern econometrics. In this paper, we derive the correct standard errors for the measures proposed by Horrace and Oaxaca (2001). We then empirically apply the derived correct standard errors in regard to the March 1998 Current Population Survey data adopted in Horrace and Oaxaca (2001), as well as the Manpower Utilization Survey in the Taiwan area conducted by the Census Bureau over the years from 1978 to 2003. The empirical results suggest that the researchers would be better to use the correct standard errors derived in this paper, accompanied by the White correction, to arrive at a more accurate statistical inference.
Volume (Year): 10 (2007)
Issue (Month): 6 ()
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- William C. Horrace & Ronald L. Oaxaca, 2001. "Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem," ILR Review, Cornell University, ILR School, vol. 54(3), pages 611-618, April.
- Ben Jann, 2005. "Standard Errors for the Blinder-Oaxaca Decomposition," German Stata Users' Group Meetings 2005 03, Stata Users Group.
- 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.
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