What is wage decomposition?

What is wage decomposition?

The Kitagawa–Blinder–Oaxaca decomposition is a statistical method that explains the difference in the means of a dependent variable between two groups by decomposing the gap into that part that is due to differences in the mean values of the independent variable within the groups, on the one hand, and group differences …

What is wage differential?

noun. the difference in wages between workers with different skills in the same industry or between those with comparable skills in different industries or localities.

How do you explain wage differentials what are its types?

Wages differ in different employments or occupations, industries and localities, and also between persons in the same employment or grade. One therefore comes across such terms as occupational wage differentials, inter-industry, inter-firm, inter-area or geographical differentials and personal differentials.

What are the contributing factors for wage differentials?

The causes of wage differentials are as follows:

• Nature of Employment.
• Profitability of Success.
• Training and Education.
• Security and Stability of Employment.
• Geographical Differences.
• Market Imperfection.
• Responsibility and Accountability of a Job.
• Strong and Organised Trade Union.

What is regression decomposition?

The first method generally referred to as “Regression Decomposition” (RD) is extensively used in demography. The total change in this regression decomposition exercise is the result of adding the disparities in parameters and independent variables among the different regions.

What is meant by statistical discrimination?

Statistical discrimination arises when groups differ statistically in their distributions on characteristics relevant in a given situation. For example, men may on average take fewer sick days than women do.

What are the bases of pay differentials?

The most popular bases of pay were “responsibility”, “qualifications” and “performance”. The attitudes appeared to reflect widespread norms about the most appropriate bases of pay.

What is decomposition analysis?

Decomposition analysis is an iterative curve-fitting problem, solved by minimising the least squares difference between the simulated (sum of components) and experimental spectra.

What is variance decomposition analysis?

Variance decomposition is a classical statistical method in multivariate analysis for uncovering simplifying structures in a large set of variables (for example, Anderson, 2003). For example, factor analysis or principal components are tools that are in widespread use.

How is the decomposition of wage differentials used?

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 implicitly assumed nondiscriminatory, competitive wage structure.

How does the theory of discrimination affect the wage structure?

The theory of discrimination provides some guidance in the choice of the nondiscrimination wage structure. The model of Becker (1971) suggests that employers with discriminatory tastes are willing to trade reduced profits for fewer miniority (or black) employees.

What was the gender wage structure in 1973?

Decompositions past and present In the gender context, Oaxaca (1973) proposes the adoption of either the current male wage structure (S2 = 1) or the current female wage structure (S2 = 0) as the nondiscriminatory wage structure. Oaxaca estimated both, suggesting that the result would bracket the actual nondiscriminatory structure.

Which is the versatile representation of the estimated nondiscriminatory wage structure?

A versatile representation of the estimated nondiscriminatory wage structure is given by _ Q + (1 – Q)fib, (10) where S2 is a weighting matrix. Given , and (10), any assumption about reduces to an assumption about S2.’ This paper deals with the proper choice of (or S2). 3.

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