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Econometrics 2018, 6(2), 28; https://doi.org/10.3390/econometrics6020028

Decomposing Wage Distributions Using Recentered Influence Function Regressions

1
Insper Institute of Education and Research, R. Quatá, 300, São Paulo–SP 04546-042, Brazil
2
Vancouver School of Economics, University of British Columbia, 6000 Iona Drive, Vancouver, BC V6T 1L4, Canada
*
Author to whom correspondence should be addressed.
Received: 31 December 2017 / Revised: 27 April 2018 / Accepted: 9 May 2018 / Published: 25 May 2018
(This article belongs to the Special Issue Econometrics and Income Inequality)
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Abstract

This paper provides a detailed exposition of an extension of the Oaxaca-Blinder decomposition method that can be applied to various distributional measures. The two-stage procedure first divides distributional changes into a wage structure effect and a composition effect using a reweighting method. Second, the two components are further divided into the contribution of each explanatory variable using recentered influence function (RIF) regressions. We illustrate the practical aspects of the procedure by analyzing how the polarization of U.S. male wages between the late 1980s and the mid 2010s was affected by factors such as de-unionization, education, occupations, and industry changes. View Full-Text
Keywords: decomposition methods; RIF-regressions; wage inequality decomposition methods; RIF-regressions; wage inequality
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Firpo, S.P.; Fortin, N.M.; Lemieux, T. Decomposing Wage Distributions Using Recentered Influence Function Regressions. Econometrics 2018, 6, 28.

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