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Multivariate Decomposition for Hazard Rate Models

Author

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  • Powers, Daniel A.

    () (University of Texas at Austin)

  • Yun, Myeong-Su

    () (Inha University)

Abstract

We develop a regression decomposition technique for hazard rate models, where the difference in observed rates is decomposed into components attributable to group differences in characteristics and group differences in effects. The baseline hazard is specified using a piecewise constant exponential model, which leads to convenient estimation based on a Poisson regression model fit to person-period, or split-episode data. This specification allows for a flexible representation of the baseline hazard and provides a straightforward way to introduce time-varying covariates and time-varying effects. We provide computational details underlying the method and apply the technique to the decomposition of the black-white difference in first premarital birth rates into components reflecting characteristics and effect contributions of several predictors, as well as the effect contribution attributable to race differences in the baseline hazard.

Suggested Citation

  • Powers, Daniel A. & Yun, Myeong-Su, 2009. "Multivariate Decomposition for Hazard Rate Models," IZA Discussion Papers 3971, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3971
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    References listed on IDEAS

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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. Mathia Sinning & Markus Hahn & Thomas K. Bauer, 2008. "The Blinder–Oaxaca decomposition for nonlinear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 480-492, December.
    3. 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.
    4. Axel Heitmueller, 2004. "Job Mobility In Britain: Are The Scots Different? Evidence From The Bhps," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(3), pages 329-358, August.
    5. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 453-479, December.
    6. 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.
    7. Thomas Bauer & Silja Göhlmann & Mathias Sinning, 2007. "Gender differences in smoking behavior," Health Economics, John Wiley & Sons, Ltd., vol. 16(9), pages 895-909.
    8. 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.
    9. Yun, Myeong-Su, 2004. "Decomposing differences in the first moment," Economics Letters, Elsevier, vol. 82(2), pages 275-280, February.
    10. Borooah, Vani & Iyer, Sriya, 2005. "The Decomposition of Inter-Group Differences in a Logit Model: Extending the Oaxaca-Blinder Approach with an Application to School Enrolment in India," MPRA Paper 19418, University Library of Munich, Germany.
    11. Tamás Bartus, 2006. "Marginal effects and extending the Blinder–Oaxaca decomposition for nonlinear models," United Kingdom Stata Users' Group Meetings 2006 05, Stata Users Group.
    12. Nielsen, Helena Skyt, 1998. "Discrimination and detailed decomposition in a logit model," Economics Letters, Elsevier, vol. 61(1), pages 115-120, October.
    13. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
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    Citations

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    Cited by:

    1. YAMAGUCHI Kazuo, 2014. "Decomposition of Gender or Racial Inequality with Endogenous Intervening Covariates: An extension of the DiNardo-Fortin-Lemieux method," Discussion papers 14061, Research Institute of Economy, Trade and Industry (RIETI).
    2. Bowblis, John R. & Yun, Myeong-Su, 2010. "Racial and Ethnic Disparities in the Use of Drug Therapy," IZA Discussion Papers 4853, Institute for the Study of Labor (IZA).
    3. García, A., 2016. "Oaxaca-Blinder Type Counterfactual Decomposition Methods for Duration Outcomes," DOCUMENTOS DE TRABAJO 014186, UNIVERSIDAD DEL ROSARIO.
    4. Rocha, Vera & Carneiro, Anabela & Varum, Celeste, 2015. "What explains the survival gap of pushed and pulled corporate spin-offs?," Economics Letters, Elsevier, vol. 126(C), pages 127-130.
    5. Daniel A. Powers & Hirotoshi Yoshioka & Myeong-Su Yun, 2011. "mvdcmp: Multivariate decomposition for nonlinear response models," Stata Journal, StataCorp LP, vol. 11(4), pages 556-576, December.

    More about this item

    Keywords

    decomposition; piecewise constant exponential model; Poisson regression; hazard rates;

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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