M.S. (Master of Science)
Department of Statistics and Actuarial Science
The persistent gender wage differential, though declining through time, is the source of motivation to study the subject.A notable method to deal with the disparity is Oaxaca Blinder decomposition in combination with OLS estimation. This study follows a different approach that does not require the normality assumption and the log transformation of the wage variable. The study employs a generalized linear model (GLM) approach to estimate determinants of wage (measured in level) and combines the results with the Oaxaca Blinder decomposition method. The latter method quantifies the proportion of the wage gap which emanates from characteristics difference between men and women and discrimination in the labor market. To this end, the study used data from the Panel Study of Income Dynamics (PSID). The Oaxaca Blinder decomposition estimates, which are extended from the gamma regression, show that there is a net average annual labor income difference of $26,755 between men and women, in favor of the former. The proportion of this difference which arises from unexplained factors that include discrimination in the labor market is $29,202. However, some proportion of this difference, $2,446, is offset by characteristics of women (like better educational attainment) which positively affects their annual labor income.
Geleta, Kassahun Mamo, "A GLM approach to decomposing wage differential: Evidence from the PSID." (2021). Graduate Research Theses & Dissertations. 7061.
Northern Illinois University
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