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Decomposing joint distributions via reweighting functions: an application to intergenerational economic mobility

Author

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  • Jeremiah Richey
  • Alicia Rosburg

Abstract

We introduce a method that extends the traditional Oaxaca-Blinder decomposition to both the full distribution of an outcome of interest and to settings where group membership varies along a continuum. We achieve this by working directly with the joint distribution of outcome and group membership and comparing it to an independent joint distribution. Like all decompositions, we assume the difference is partially due to differences in characteristics between groups (a composition effect) and partially due to differences in returns to characteristics between groups (a structure effect). We use reweighting functions to estimate a counterfactual joint distribution representing the hypothetical if characteristics did not vary according to group while returns to characteristics did. The counterfactual allows us to decompose differences between the empirical and independent distributions into composition and structure effects. We demonstrate the method by decomposing multiple measures of immobility for white men in the U.S.

Suggested Citation

  • Jeremiah Richey & Alicia Rosburg, 2020. "Decomposing joint distributions via reweighting functions: an application to intergenerational economic mobility," Econometric Reviews, Taylor & Francis Journals, vol. 39(6), pages 541-558, July.
    • Handle: RePEc:taf:emetrv:v:39:y:2020:i:6:p:541-558
    DOI: 10.1080/07474938.2019.1697088
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    Cited by:

    1. is not listed on IDEAS
    2. Brantly Callaway & Weige Huang, 2019. "Local Intergenerational Elasticities," Economics Bulletin, AccessEcon, vol. 39(2), pages 919-928.
    3. Webber, Douglas A., 2018. "Employment Adjustment over the Business Cycle: The Impact of Competition in the Labor Market," IZA Discussion Papers 11887, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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