Resource title

A Simple Solution to the Identification Problem in Detailed Wage Decompositions

Resource image

image for OpenScout resource :: A Simple Solution to the Identification Problem in Detailed Wage Decompositions

Resource description

Oaxaca and Ransom (1999) show that a detailed decomposition of the coefficients effect is destined to suffer from an identification problem since the detailed coefficients effect attributed to a dummy variable is not invariant to the choice of reference groups. It turns out that the identification problem in the decomposition equation is a disguised identification problem of constant and dummy variables in a regression equation. This paper proposes a simple and natural remedy for this problem by utilizing ?normalized? regressions which enable us to identify the constant and estimates of each dummy variable. The identification problem is automatically resolved once we obtain ?normalized? regression equations for two comparison groups.

Resource author

Myeong-Su Yun

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/20081

Resource license

Adapt according to the presented license agreement and reference the original author.