Chronic Renal Disease and Wage Discrimination: An Application of Oaxaca-Blinder Decomposition

Posted: 21 Apr 2011

See all articles by Marcia Regina Godoy

Marcia Regina Godoy

Universidade do Vale do Rio dos Sinos - Faculty of Economics

Giacomo Balbinotto Neto

Federal University of Rio Grande do Sul (UFRGS)

Pedro P. Barros

Universidade Nova de Lisboa

Eduardo P. Ribeiro

Federal University of Rio Grande do Sul - UFRGS

Date Written: Oct 19, 2007

Abstract

INTRODUCTION: The number of patients with chronic renal disease (CRD) has grown in the world as a whole. Beyond the increase in public expenditure, this disease has brought other economic implications. The objective this paper is to estimate wage discrimination between two groups: individuals with and without chronic renal disease.

METHODS: Using the Oxaca-Blinder (1973) decomposition we analyzing data from the Brazilian Household Survey (Pesquisa Nacional por Amostra de Domicílios - PNAD/2003), where the individuals self-reported the presence of the some illnesses.The sample used contains 132,966 observations of men and women between 18 and 55 years of age and income larger than R$1,00. The individuals that self-reported have chronic renal disease, diagnosed by doctor, are 2499 (1.9% of the sample). The dependent variable is log hourly earning. The explanatory variables include are: age, years of potencial experience, years of schooling; and its square; and dummies for gender, color and local.

We start by estimating earning function by ordinary least squares method for each group (renal and not renal) separately. By subtracting the earning functions by ports, we are able to decompose the earnings gaps into two distinct components: 1) "differences in endowment", is part of the gap that can be attributed to the differences in mean human capital characteristics; 2) "discrimination", is the part of the gap than can be attributed to differences in estimated parameters of the earnings functions.

RESULTS: The data shows that the unemployment is big. Using a probit model we find that the probability of work is -29.7% for the CRD. The women with CRD have a lower wage than others. The Oaxaca-Blinder decomposition show that the wage gap is 11.9%, which 7.4% are due to difference in endowments (E), 4.1% differences in coefficients (C) and 0.4% attributed at interaction (C*E). The majority of the earnings gap - 64.5% - is due to differences in endowments and 34.5% may be due to discrimination. Using Mroz (1987) approach we find that the individuals with CRD offer plus 7.7 hours of work than the other group.

CONCLUSION: The findings that a particularly high degree discrimination against the individuals with chronic renal disease, specially the women. The empirical results show that the chronic renal disease may be leads to lower earnings and a lower employment probability.

Keywords: Oaxaca-Blinder Decomposition, Chronic Renal Disease, Kidney, discrimination, health economics

JEL Classification: I1, J15, J31, J71

Suggested Citation

Godoy, Marcia Regina and Neto, Giacomo Balbinotto and Pita Barros, Pedro Luis and Ribeiro, Eduardo P., Chronic Renal Disease and Wage Discrimination: An Application of Oaxaca-Blinder Decomposition (Oct 19, 2007). Available at SSRN: https://ssrn.com/abstract=1815417

Marcia Regina Godoy (Contact Author)

Universidade do Vale do Rio dos Sinos - Faculty of Economics ( email )

São Leopoldo
Rio Grande do Sul, 93022000
Brazil

Giacomo Balbinotto Neto

Federal University of Rio Grande do Sul (UFRGS) ( email )

AV. JOAO PESSOA 52 3 ANDAR (PPGE)
UFRGS/PPGE
Porto Alegre RS CEP 90480-004, RS 90.040-000
Brazil
+55 51 33083150 (Phone)

HOME PAGE: http://www.ppge.ufrgs.br/giacomo

Pedro Luis Pita Barros

Universidade Nova de Lisboa ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal
+351 21 383 3624 (Phone)
+351 21 388 6073 (Fax)

HOME PAGE: http://ppbarros.fe.unl.pt

Eduardo P. Ribeiro

Federal University of Rio Grande do Sul - UFRGS ( email )

Rio Grande do Sul
Graduate Program in Economics - PPGE Av. Joao Pessoa, 52, sala 33b
Porto Alegre 90040-000
Brazil
55 51 3316 3440 (Phone)
55 51 3316 3507 (Fax)

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