Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/20081 
Authors: 
Year of Publication: 
2003
Series/Report no.: 
IZA Discussion Papers No. 836
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
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.
Subjects: 
detailed decomposition
invariance
identification
characteristics effect
coefficients effect
normalized regression
JEL: 
J70
C20
Document Type: 
Working Paper

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