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RESEARCH PAPER NO. 879
BOUNDING ESTIMATES OF
WAGE DISCRIMINATION
J. G. HIRSCHBERG &
D. J. SLOTTJE
AUGUST 2003
Department of Economics. University of Melbourne.
Melbourne Victoria 3010 Australia
The Blinder Oaxaca decomposition
method for defining wage differentials (generally
referred to as discriminination) from the
wage equations of two groups has had a wide
degree of application. However, the
decomposition measures can vary dramatically
depending on the definition of the non-discriminatory
wage chosen for comparison. This paper
uses a form of extreme bounds analysis to
define the limits on the measure of discrimination
that can be obtained from these decompositions.
A simple application is presented
to demonstrate the use of the bootstrap
to define the distributions of the discrimination
measure.
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