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Decomposing Income, Earnings, and Wage Differentials

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  • JEREMIAH COTTON

    (University of Massachusetts, Boston)

Abstract

A reformulation of the widely used method for decomposing income, earnings, and wage differentials is undertaken in this article. This new formula is derived from the assumptions of the theory of discrimination that has motivated most of the empirical work on the subject. Unlike previous the decompositions, the method presented here yields separate terms representing the monetary advantage discrimination confers on whites and the monetary disadvantage to blacks.

Suggested Citation

  • Jeremiah Cotton, 1985. "Decomposing Income, Earnings, and Wage Differentials," Sociological Methods & Research, , vol. 14(2), pages 201-216, November.
    • Handle: RePEc:sae:somere:v:14:y:1985:i:2:p:201-216
    DOI: 10.1177/0049124185014002005
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    References listed on IDEAS

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    1. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    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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    6. James D. Gwartney & James E. Long, 1978. "The Relative Earnings of Blacks and other Minorities," ILR Review, Cornell University, ILR School, vol. 31(3), pages 336-346, April.
    7. Stanley H. Masters, 1974. "The Effect of Educational Differences and Labor-Market Discrimination on the Relative Earnings of Black Males," Journal of Human Resources, University of Wisconsin Press, vol. 9(3), pages 342-360.
    8. F. L. Jones, 1983. "On Decomposing the Wage Gap: A Critical Comment on Blinder's Method," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 126-130.
    9. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
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