Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94314
Authors: 
Yun, Myeong-Su
Year of Publication: 
2000
Series/Report no.: 
Working Papers, Department of Economics, Rutgers, The State University of New Jersey 2000-01
Abstract: 
This paper introduces a new and simple decomposition method for a binary choice model that is equivalent to the Blinder-Oaxaca decomposition analysis for wage differentials. The decomposition method is first developed for a single probit model and later generalized to a simultaneous equations model. Using Taylor expansion, we approximate the differences in the probabilities of choosing option 1 over option 0 between two groups in order to find the effects of the differences in ``each'' individual characteristic and the differences in ``each'' coefficient. We implement this decomposition analysis studying the racial gap in female labor market participation rates. The racial gap of participation rates among women can be almost exclusively explained by the differences in the coefficients.
Subjects: 
decomposition analysis
selection bias
labor market participation
probit
JEL: 
C25
C35
J21
Document Type: 
Working Paper

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