An Extension of the Blinder-Oaxaca Decomposition to Non-Linear Models
18 Pages Posted: 17 Jan 2007 Last revised: 9 Oct 2008
Date Written: October 2006
In this paper, a general Blinder-Oaxaca decomposition is derived that can also be applied to non-linear models, which allows the differences in a non-linear outcome variable between two groups to be decomposed into a part that is explained by differences in observed characteristics and a part attributable to differences in the estimated coeffcients. Departing from this general model, we show how it can be applied to different models with discrete and limited dependent variables.
Keywords: Blinder-Oaxaca decomposition, non-linear models
JEL Classification: C13, C20
Suggested Citation: Suggested Citation