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Identifying and measuring economic discrimination

Sergio Firpo

IZA World of Labor, 2017, No 347, 347

Abstract: Differences in wages between men and women, white and black workers, or any two distinct groups are a controversial feature of the labor market, raising concern about discrimination by employers. Decomposition methods shed light on those differences by separating them into: (i) composition effects, which are explained by differences in the distribution of observable variables, e.g. education level; and (ii) structural effects, which are explained by differences in the returns to observable and unobservable variables. Often, a significant structural effect, such as different returns to education, can be indicative of discrimination.

Keywords: decomposition methods; Oaxaca-Blinder Decomposition; quantile decomposition; wage gap (search for similar items in EconPapers)
JEL-codes: C01 J00 (search for similar items in EconPapers)
Date: 2017
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