Chronic Renal Disease and Wage Discrimination: An Application of Oaxaca-Blinder Decomposition
Posted: 21 Apr 2011
Date Written: Oct 19, 2007
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
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