Marginal effects and extending the Blinder–Oaxaca decomposition for nonlinear models
Students of racial and gender inequalities are often interested in knowing to what extent an observed group difference can be attributed to differences in returns to productive abilities (discrimination effect) or to differences in the average of productive abilities (endowment effect). The standard Blinder–Oaxaca decomposition technique, which applies to continuous outcomes, measures the discrimination (endowment) effect in terms of differences in group-specific regression parameters (means), weighted by group-specific means (regression parameters). This article shows that the standard decomposition technique can be meaningfully extended to categorical outcomes if the regression coefficients are substituted with marginal effects. A user-written program, gdecomp (working title), is also presented, which basically processes marginal effects obtained from another user-written program, margeff. It is available from the SSC Archive.
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- Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
- Yun, Myeong-Su, 2003.
"Decomposing Differences in the First Moment,"
IZA Discussion Papers
877, Institute for the Study of Labor (IZA).
- repec:uwp:jhriss:v:8:y:1973:i:4:p:436-455 is not listed on IDEAS
- Ben Jann, 2005. "Standard Errors for the Blinder-Oaxaca Decomposition," German Stata Users' Group Meetings 2005 03, Stata Users Group.
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