Unexplained gaps and Oaxaca-Blinder decompositions

Todd Elder, John Goddeeris and Steven Haider

Labour Economics, 2010, vol. 17, issue 1, 284-290

Abstract: We analyze four methods to measure unexplained gaps in mean outcomes: three decompositions based on the seminal work of Oaxaca (1973) and Blinder (1973) and an approach involving a seemingly naïve regression that includes a group indicator variable. Our analysis yields two principal findings. We show that the coefficient on a group indicator variable from an OLS regression is an attractive approach for obtaining a single measure of the unexplained gap. We also show that a commonly-used pooling decomposition systematically overstates the contribution of observable characteristics to mean outcome differences when compared to OLS regression, therefore understating unexplained differences. We then provide three empirical examples that explore the practical importance of our analytic results.

Keywords: Decompositions; Discrimination (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (111)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927-5371(09)00117-1
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Unexplained Gaps and Oaxaca-Blinder Decompositions (2009)
Working Paper: Unexplained Gaps and Oaxaca-Blinder Decompositions (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:17:y:2010:i:1:p:284-290

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().