Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98350
Authors: 
Fairlie, Robert W.
Year of Publication: 
2003
Series/Report no.: 
Center Discussion Paper 873
Abstract: 
The Blinder-Oaxaca decomposition technique is widely used to identify and quantify the separate contributions of group differences in measurable characteristics, such as education, experience, marital status, and geographical differences to racial and gender gaps in outcomes. The technique cannot be used directly, however, if the outcome is binary and the coefficients are from a logit or probit model. I describe a relatively simple method of performing a decomposition that uses estimates from a logit or probit model. Expanding on the original application of the technique in Fairlie (1999), I provide a more thorough discussion of how to apply the technique, an analysis of the sensitivity of the decomposition estimates to different parameters, and the calculation of standard errors.
Subjects: 
Logit
Probit
Decomposition
Race
Gender
Discrimination
JEL: 
C8
J7
Document Type: 
Working Paper

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