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On the standard errors of Oaxaca-type decompositions for inter-industry gender wage differentials


  • Eric S. Lin

    () (National Tsing Hua University)


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.

Suggested Citation

  • Eric S. Lin, 2007. "On the standard errors of Oaxaca-type decompositions for inter-industry gender wage differentials," Economics Bulletin, AccessEcon, vol. 10(6), pages 1-11.
  • Handle: RePEc:ebl:ecbull:eb-07j00001

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    References listed on IDEAS

    1. Ben Jann, 2005. "Standard Errors for the Blinder-Oaxaca Decomposition," German Stata Users' Group Meetings 2005 03, Stata Users Group.
    2. 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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    Cited by:

    1. Vogel, Matt & van Ham, Maarten, 2016. "Disentangling Neighborhood Effects in Person-Context Research: An Application of a Neighborhood-Based Group Decomposition," IZA Discussion Papers 9793, Institute for the Study of Labor (IZA).
    2. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 453-479, December.
    3. Lin, Carl, 2012. "Less Myth, More Measurement: Decomposing Excess Returns from the 1989 Minimum Wage Hike," IZA Discussion Papers 6269, Institute for the Study of Labor (IZA).

    More about this item


    Gender wage gap;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General


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