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A detailed decomposition of synthetic cohort analysis

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  • Barr, Tavis
  • Lin, Carl

Abstract

We present a detailed decomposition method and provide a Stata estimator to assess relative changes between two groups over time in a synthetic cohort analysis. Using the convergence of black–white wage gap between 1960 and 1970 as an example, we show that education accounts for 73% of the value of change in characteristics while experience explains only 3%.

Suggested Citation

  • Barr, Tavis & Lin, Carl, 2015. "A detailed decomposition of synthetic cohort analysis," Economics Letters, Elsevier, vol. 127(C), pages 76-80.
    • Handle: RePEc:eee:ecolet:v:127:y:2015:i:c:p:76-80
    DOI: 10.1016/j.econlet.2014.12.032
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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. George J. Borjas, 2021. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 2, pages 3-29, World Scientific Publishing Co. Pte. Ltd..
    3. 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.
    4. Ben Jann, 2005. "Standard Errors for the Blinder-Oaxaca Decomposition," German Stata Users' Group Meetings 2005 03, Stata Users Group.
    5. 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.
    6. 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.
    7. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
    8. 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.
    9. Ben Jann, 2008. "A Stata implementation of the Blinder-Oaxaca decomposition," ETH Zurich Sociology Working Papers 5, ETH Zurich, Chair of Sociology, revised 14 May 2008.
    10. Yun, Myeong-Su, 2004. "Decomposing differences in the first moment," Economics Letters, Elsevier, vol. 82(2), pages 275-280, February.
    11. Thomas M. Lyons & James J. Heckman & Petra E. Todd, 2000. "Understanding Black-White Wage Differentials, 1960-1990," American Economic Review, American Economic Association, vol. 90(2), pages 344-349, May.
    12. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-564, June.
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    Cited by:

    1. Okumura, Tsunao & Usui, Emiko, 2016. "Intergenerational Transmission of Skills and Differences in Labor Market Outcomes for Blacks and Whites," IZA Discussion Papers 9662, Institute of Labor Economics (IZA).
    2. Serge Atherwood & Corey S Sparks, 2019. "Early-career trajectories of young workers in the U.S. in the context of the 2008–09 recession: The effect of labor market entry timing," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-30, March.
    3. Dong Zhou, 2016. "The Long-term Impacts of the Cultural Revolution: A Micro-Analysis," LABOUR, CEIS, vol. 30(3), pages 285-317, September.

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    More about this item

    Keywords

    Oaxaca–Blinder decomposition; Detailed decomposition; Synthetic cohort; Wage gap; Repeated cross sections;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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