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Decompositions: Accounting for Discrimination

In: Handbook on Economics of Discrimination and Affirmative Action

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  • Gurleen Popli

    (University of Sheffield)

Abstract

This chapter summarizes the different regression-based decomposition methods used in the empirical literature to evaluate discrimination. Starting with the decomposition at the mean using the methods made popular in the 1970s by Oaxaca and Blinder, we discuss how the method has evolved over time to look beyond the means, taking into account the entire distribution of the outcomes of interest. We present the formal identification assumptions underlying the decomposition method and discuss cautions that should be exercised in interpreting them and their limitations. We also explain how the “unexplained gap” in the decomposition, often used as a measure of discrimination, relates to the treatment effect literature.

Suggested Citation

  • Gurleen Popli, 2023. "Decompositions: Accounting for Discrimination," Springer Books, in: Ashwini Deshpande (ed.), Handbook on Economics of Discrimination and Affirmative Action, chapter 8, pages 133-150, Springer.
    • Handle: RePEc:spr:sprchp:978-981-19-4166-5_15
    DOI: 10.1007/978-981-19-4166-5_15
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    Keywords

    Decomposition; Counterfactual regressions; Distributions; Discrimination;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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