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A note on variance estimation for the Oaxaca estimator of average treatment effects

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  • Kline, Patrick

Abstract

We derive the limiting distribution of the Oaxaca estimator of average treatment effects studied by Kline (2011). A consistent estimator of the asymptotic variance is proposed that makes use of standard regression routines. It is shown that ignoring uncertainty in group means will tend to lead to an overstatement of the asymptotic standard errors. Monte Carlo experiments examine the finite sample performance of competing approaches to inference.

Suggested Citation

  • Kline, Patrick, 2014. "A note on variance estimation for the Oaxaca estimator of average treatment effects," Economics Letters, Elsevier, vol. 122(3), pages 428-431.
    • Handle: RePEc:eee:ecolet:v:122:y:2014:i:3:p:428-431
    DOI: 10.1016/j.econlet.2013.12.026
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    3. Graham, Bryan S. & Pinto, Cristine Campos de Xavier, 2022. "Semiparametrically efficient estimation of the average linear regression function," Journal of Econometrics, Elsevier, vol. 226(1), pages 115-138.
    4. Carol Newman & John Page & John Rand & Abebe Shimeles & Måns Söderbom & Finn Tarp, 2018. "Linked in by foreign direct investment: The role of firm-level relationships in knowledge transfers in Africa and Asia," WIDER Working Paper Series 161, World Institute for Development Economic Research (UNU-WIDER).
    5. Antonio Cruz & Carol Newman & John Rand & Finn Tarp, 2017. "Learning by Exporting: The Case of Mozambican Manufacturing," Journal of African Economies, Centre for the Study of African Economies, vol. 26(1), pages 93-118.
    6. Carol Newman & John Page & John Rand & Abebe Shimeles & Måns Söderbom & Finn Tarp, 2018. "Linked in by foreign direct investment: The role of firm-level relationships in knowledge transfers in Africa and Asia," WIDER Working Paper Series wp-2018-161, World Institute for Development Economic Research (UNU-WIDER).
    7. Marco Percoco, 2018. "Wealth inequality, redistribution and local development: The case of land reform in Italy," Environment and Planning C, , vol. 36(2), pages 181-200, March.
    8. Słoczyński, Tymon, 2012. "New Evidence on Linear Regression and Treatment Effect Heterogeneity," MPRA Paper 39524, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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