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Pseudo-Panel Decomposition of the Blinder–Oaxaca Gender Wage Gap

Author

Listed:
  • Jhon James Mora

    (Departmento de Economia, Universidad Icesi, Cali 760031, Colombia)

  • Diana Yaneth Herrera

    (Departmento de Economia, Universidad Icesi, Cali 760031, Colombia)

Abstract

This article introduces a novel approach to decomposing the Blinder–Oaxaca gender wage gap using pseudo-panel data. In many developing countries, panel data are not available; however, understanding the evolution of the gender wage gap over time requires tracking individuals longitudinally. When individuals change across time periods, estimators tend to be inconsistent and inefficient. To address this issue, and building upon the traditional Blinder–Oaxaca methodology, we propose an alternative procedure that follows cohorts over time rather than individuals. This approach enables the estimation of both the explained and unexplained components—“endowment effect” and “remuneration effect”—of the wage gap, along with their respective standard errors, even in the absence of true panel data. We apply this methodology to the case of Colombia, finding a gender wage gap of approximately 15% in favor of male cohorts. This gap comprises a −5.6% explained component and a 20% unexplained component without controls. When we control by informality, size of the firm and sector the gap comprises a −3.5% explained component and a 18.7% unexplained component.

Suggested Citation

  • Jhon James Mora & Diana Yaneth Herrera, 2025. "Pseudo-Panel Decomposition of the Blinder–Oaxaca Gender Wage Gap," Econometrics, MDPI, vol. 13(3), pages 1-16, July.
  • Handle: RePEc:gam:jecnmx:v:13:y:2025:i:3:p:27-:d:1705247
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    References listed on IDEAS

    as
    1. Jhon James Mora & Juan Muro, 2017. "Dynamic Effects of the Minimum Wage on Informality in Colombia," LABOUR, CEIS, vol. 31(1), pages 59-72, March.
    2. Marine Guillerm, 2017. "Pseudo‑panel methods and an example of application to Household Wealth data," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 491-492, pages 109-130.
    3. Lina Buchely, 2013. "Overcoming Gender Disadvantages. Social Policy Analysis of urban middle-class women in Colombia," Revista de Economía del Rosario, Universidad del Rosario.
    4. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    5. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LLC, vol. 8(4), pages 453-479, December.
    6. repec:prs:ecstat:estat_0336-1454_2017_num_491_1_10759 is not listed on IDEAS
    7. Ian Watson, 2010. "Decomposing the Gender Pay Gap in the Australian Managerial Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 13(1), pages 49-79.
    8. 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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