An Extension of the Blinder-Oaxaca Decomposition Technique to Logit and Probit Models

18 Pages Posted: 26 Jan 2006

See all articles by Robert W. Fairlie

Robert W. Fairlie

University of California, Santa Cruz - Department of Economics

Date Written: January 2006

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.

Keywords: Logit, Probit, Decomposition, Race, Gender, Discrimination

JEL Classification: C8, J7

Suggested Citation

Fairlie, Robert W., An Extension of the Blinder-Oaxaca Decomposition Technique to Logit and Probit Models (January 2006). Yale University Economic Growth Center Discussion Paper No. 873, IZA Discussion Paper No. 1917, Available at SSRN: https://ssrn.com/abstract=497302

Robert W. Fairlie (Contact Author)

University of California, Santa Cruz - Department of Economics ( email )

Department of Economics
Engineering 2 Bldg.
Santa Cruz, CA 95064
United States
831-459-3332 (Phone)

HOME PAGE: http://econ.ucsc.edu/~fairlie/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2,075
Abstract Views
7,761
rank
8,624
PlumX Metrics