An Extension of the Blinder-Oaxaca Decomposition to Non-Linear Models

18 Pages Posted: 17 Jan 2007 Last revised: 9 Oct 2008

See all articles by Thomas K. Bauer

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University of Bochum - Faculty of Economics; IZA Institute of Labor Economics

Mathias Sinning

Australian National University (ANU) - Crawford School of Public Policy

Date Written: October 2006

Abstract

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

Bauer, Thomas K. and Sinning, Mathias, An Extension of the Blinder-Oaxaca Decomposition to Non-Linear Models (October 2006). RWI Discussion Paper No. 49, Available at SSRN: https://ssrn.com/abstract=957554 or http://dx.doi.org/10.2139/ssrn.957554

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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University of Bochum - Faculty of Economics ( email )

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IZA Institute of Labor Economics ( email )

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Mathias Sinning (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://www.mathiassinning.com

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