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Shapley-value decompositions of changes in wage distributions: a note

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  • Francesco Devicienti

Abstract

This note shows how the Shapley-value can be applied to the regression-based methods that are often used to decompose changes in wage distributions. The method remedies the path-dependency exhibited by existing approaches that compute the contributions due to (i) changes in sample observable characteristics, (ii) changes in the return of characteristics, (iii) changes in the distribution of unobservable characteristics.
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  • Francesco Devicienti, 2010. "Shapley-value decompositions of changes in wage distributions: a note," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(1), pages 35-45, March.
    • Handle: RePEc:kap:jecinq:v:8:y:2010:i:1:p:35-45
    DOI: 10.1007/s10888-008-9102-3
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    2. Masato Okamoto, 2011. "Source decomposition of changes in income inequality: the integral-based approach and its approximation by the chained Shapley-value approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 145-181, June.
    3. Baumgarten, Daniel, 2013. "Exporters and the rise in wage inequality: Evidence from German linked employer–employee data," Journal of International Economics, Elsevier, vol. 90(1), pages 201-217.
    4. Janneke Pieters, 2011. "Education and Household Inequality Change: A Decomposition Analysis for India," Journal of Development Studies, Taylor & Francis Journals, vol. 47(12), pages 1909-1924.
    5. Chantreuil, Frédéric & Fourrey, Kévin & Lebon, Isabelle & Rebière, Thérèse, 2021. "Magnitude and evolution of gender and race contributions to earnings inequality across US regions," Research in Economics, Elsevier, vol. 75(1), pages 45-59.
    6. Vincent A. Hildebrand & María Noel Pi Alperin & Philippe Van Kerm, 2017. "Measuring and Accounting for the Deprivation Gap of Portuguese Immigrants in Luxembourg," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(2), pages 288-309, June.
    7. SOLOGON Denisa & VAN KERM Philippe & LI Jinjing & O'DONOGHUE Cathal, 2018. "Accounting for Differences in Income Inequality across Countries: Ireland and the United Kingdom," LISER Working Paper Series 2018-01, Luxembourg Institute of Socio-Economic Research (LISER).
    8. Xingwei Hu, 2018. "A Dichotomous Analysis of Unemployment Welfare," Papers 1808.08563, arXiv.org, revised Jun 2019.
    9. SOLOGON Denisa & ALMEIDA Vanda & VAN KERM Philippe, 2019. "Accounting for the distributional effects of the 2007-2008 crisis and the Economic Adjustment Program in Portugal," LISER Working Paper Series 2019-05, Luxembourg Institute of Socio-Economic Research (LISER).
    10. Ramani Gunatilaka & Duangkamon Chotikapanich, 2009. "Accounting For Sri Lanka'S Expenditure Inequality 1980–2002: Regression‐Based Decomposition Approaches," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(4), pages 882-906, December.
    11. Gunatilaka, Ramani., 2013. "To work or not to work? : Factors holding women back from market work in Sri Lanka," ILO Working Papers 994838403402676, International Labour Organization.
    12. Xingwei Hu, 2018. "A Theory of Dichotomous Valuation with Applications to Variable Selection," Papers 1808.00131, arXiv.org, revised Mar 2020.
    13. Chantreuil, Frédéric & Fourrey, Kévin & Lebon, Isabelle & Rebiere, Therese, 2020. "Decomposing US Income Inequality à La Shapley: Race Matters, but Gender Too," IZA Discussion Papers 12950, Institute of Labor Economics (IZA).
    14. Fabián Slonimczyk, 2013. "Earnings inequality and skill mismatch in the U.S.: 1973–2002," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(2), pages 163-194, June.
    15. Philipp Ehrl, 2014. "A breakdown of residual wage inequality in Germany," Working Papers 150, Bavarian Graduate Program in Economics (BGPE).
    16. Ayal Kimhi & Nirit Hanuka-Taflia, 2019. "What drives the convergence in male and female wage distributions in Israel? A Shapley decomposition approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(3), pages 379-399, September.
    17. Arthur Charpentier & Stéphane Mussard, 2011. "Income inequality games," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(4), pages 529-554, December.
    18. Amirah El-Haddad & May Gadallah, 2018. "The Informalization of the Egyptian Economy (1998-2012): A Factor in Growing Wage Inequality?," Working Papers 1210, Economic Research Forum, revised 12 Jun 2018.
    19. repec:ilo:ilowps:483840 is not listed on IDEAS
    20. Xingwei Hu, 2020. "A theory of dichotomous valuation with applications to variable selection," Econometric Reviews, Taylor & Francis Journals, vol. 39(10), pages 1075-1099, November.
    21. Rosalba Manna & Andrea Regoli, 2012. "Regression-based approaches for the decomposition of income inequality in Italy, 1998-2008," Rivista di statistica ufficiale, ISTAT - Italian National Institute of Statistics - (Rome, ITALY), vol. 14(1), pages 5-18, October.
    22. Paolo Verme & Branko Milanovic & Sherine Al-Shawarby & Sahar El Tawila & May Gadallah & Enas Ali A. El-Majeed, 2014. "Inside Inequality in the Arab Republic of Egypt : Facts and Perceptions across People, Time, and Space," World Bank Publications - Books, The World Bank Group, number 17583.

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    More about this item

    Keywords

    Regression-based decomposition methods; Wage distribution; Shapley-value; J31;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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