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More on identification in detailed wage decompositions

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  • Javier Gardeazabal
  • Aratza Ugidos

Abstract

Wage decompositions are often used to decompose wage differentials of two demographic groups into differences in characteristics and differences in returns to those characteristics. The latter part is used as an estimate of the degree of discrimination. A problem with this approach is that the contributions of individual dummy variables to the wage decomposition are not identified. This note proposes a simple solution to the identification problem. The solution is illustrated with an empirical application to Spanish labor market data. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Suggested Citation

  • Javier Gardeazabal & Aratza Ugidos, "undated". "More on identification in detailed wage decompositions," Studies on the Spanish Economy 140, FEDEA.
    • Handle: RePEc:fda:fdaeee:140
    as

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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. William C. Horrace & Ronald L. Oaxaca, 2001. "Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem," ILR Review, Cornell University, ILR School, vol. 54(3), pages 611-618, April.
    5. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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