On discrimination and the decomposition of wage differentials

In this paper we examine four alternative methods for estimating the extent of labor market discrimination. All of the methods involve the decomposition of gross (unadjusted) wage differentials into discrimination and productivity components. These methods can be expressed in a single generalized fo...

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Bibliographic Details
Published in:Journal of econometrics 1994-03, Vol.61 (1), p.5-21
Main Authors: Oaxaca, Ronald L, Ransom, Michael R
Format: Article
Language:English
Subjects:
Discrimination
Econometrics
Economic models
Labor market
Labor market discrimination
Studies
Wage composition
Wage differential
Wage differentials
Wages & salaries
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Summary:In this paper we examine four alternative methods for estimating the extent of labor market discrimination. All of the methods involve the decomposition of gross (unadjusted) wage differentials into discrimination and productivity components. These methods can be expressed in a single generalized form and are shown to differ with respect to the implicity assumed nondiscriminatory, competitive wage structure. Equivalencies among the methods are shown to exist under certain restrictive conditions. These methods are applied to micro data from the U.S. Current Population Survey and from a specific U.S. firm.
ISSN:0304-4076
1872-6895
DOI:10.1016/0304-4076(94)90074-4