Assessing Changes in Wage Gaps: A New Approach

Carolina Castagnetti, Luisa Rosti and Marina Toepfer ()
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Luisa Rosti: University of Pavia
Marina Toepfer: University of Erlangen-Nuremberg

No 170, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: Little work has been done on directly estimating differences in pay gaps. Studies that estimate pay di erentials generally compare them across different sub-samples or rely on decompositions that are based on the assumption of independent errors across samples. Both methods contain serious drawbacks that we overcome by proposing an extension of the Oaxaca-Blinder decomposition. Our proposed method overcomes both the index number and the indeterminacy problem of standard Oaxaca-Blinder decompositions. In addition, like the standard decomposition, our proposed approach can be extended beyond the mean by using linear unconditional quantile regressions and can be decomposed in detail. We present two empirical applications to illustrate the methodology.

Keywords: Pay Differential; Decomposition; Index Number Problem (search for similar items in EconPapers)
JEL-codes: J13 J31 J7 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2019-03
New Economics Papers: this item is included in nep-ore
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