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Normalized Equation and Decomposition Analysis: Computation and Inference

  • Yun, Myeong-Su

    ()

    (Tulane University)

This paper joins discussions on normalized regression and decomposition equations in devising a simple and general algorithm for obtaining the normalized regression and applying it to the Oaxaca decomposition. This resolves the invariance problem in the detailed Oaxaca decomposition. An algorithm to calculate an asymptotic covariance matrix for estimates in the normalized regression for hypothesis testing is also derived. We extend these algorithms to non-linear equations where the underlying equation is linear and decompose differences in the first moment.

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File URL: http://ftp.iza.org/dp1822.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1822.

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Length: 25 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1822
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  1. Myeong-Su Yun, 2005. "A Simple Solution to the Identification Problem in Detailed Wage Decompositions," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 766-772, October.
  2. Ronald Oaxaca, 1971. "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
  3. John P. Haisken-DeNew & Christoph M. Schmidt, . "Inter-Industry and Inter-Region Differentials: Mechanics and Interpretation," Working Papers 9504, SELAPO Center for Human Resources.
  4. Yun, Myeong-Su, 2004. "Decomposing differences in the first moment," Economics Letters, Elsevier, vol. 82(2), pages 275-280, February.
  5. Denise J. Doiron & W. Craig Riddell, 1994. "The Impact of Unionization on Male-Female Earnings Differences in Canada," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 504-534.
  6. Javier Gardeazabal & Aratza Ugidos, . "More on identification in detailed wage decompositions," Studies on the Spanish Economy 140, FEDEA.
  7. 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.
  8. Edin, Per-Anders & Zetterberg, Johnny, 1992. "Interindustry Wage Differentials: Evidence from Sweden and a Comparison with the United States," American Economic Review, American Economic Association, vol. 82(5), pages 1341-49, December.
  9. Even, William E. & Macpherson, David A., 1990. "Plant size and the decline of unionism," Economics Letters, Elsevier, vol. 32(4), pages 393-398, April.
  10. Fairlie, Robert, 2014. "An Extension of the Blinder-Oaxaca Decomposition Technique to Logit and Probit Models," Santa Cruz Department of Economics, Working Paper Series qt7j86n5q3, Department of Economics, UC Santa Cruz.
  11. Ham, John C & Svejnar, Jan & Terrell, Katherine, 1998. "Unemployment and the Social Safety Net during Transitions to a Market Economy: Evidence from the Czech and Slovak Republics," American Economic Review, American Economic Association, vol. 88(5), pages 1117-42, December.
  12. Suits, Daniel B, 1984. "Dummy Variables: Mechanics v. Interpretation," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 177-80, February.
  13. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  14. Greene, William H & Seaks, Terry G, 1991. "The Restricted Least Squares Estimator: A Pedagogical Note," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 563-67, August.
  15. William E. Even & David A. Macpherson, 1993. "The Decline of Private-Sector Unionism and the Gender Wage Gap," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 279-296.
  16. Abowd, John M & Killingsworth, Mark R, 1984. "Do Minority-White Unemployment Differences Really Exist?," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(1), pages 64-72, January.
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