oaxaca: Blinder-Oaxaca Decomposition in R

Abstract

This article introduces the R package oaxaca to perform the Blinder-Oaxaca decomposition, a statistical method that decomposes the gap in mean outcomes across two groups into a portion that is due to differences in group characteristics and a portion that cannot be explained by such differences. Although this method has been most widely used to study gender- and race-based discrimination in the labor market, Blinder-Oaxaca decompositions can be applied to explain differences in any continuous outcome across any two groups. The oaxaca package implements all the most commonly used variants of the Blinder-Oaxaca decomposition for linear regression models, calculates bootstrapped standard errors for its estimates, and allows users to visualize the decomposition results.

Keywords: Blinder-Oaxaca decomposition, linear regression models, R

JEL Classification: C1, C10, C13, C15, C87, J31, J70, J71, M52