This paper extends the Oaxaca-Blinder decomposition method to the quantile regression random-coefficients framework. Mean-based decompositions are obtained as the integration of the quantile regression decomposition process. This method allows identifying if the observed differences between two groups differ across quantiles, and if so, what is the contribution to the mean-based Oaxaca-Blinder decomposition. The proposed methodology is applied to the analysis of caste discrimination in Nepal. The results indicate that much of the discrimination occurs at the lowest quantiles, which implies that disadvantaged groups are the ones who suffer the most caste discrimination.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price includes VAT (USA)
Tax calculation will be finalised during checkout.
Altonji, J.G., Blank, R.M.: Race and gender in the labor market. In: Ashenfelter, O., Card, D. (eds.) Handbook of Labor Economics, vol. 3, chap. 48, pp. 3143–3259. Elsevier (1999)
Autor, D.H., Katz, L.S., Kearney, M.S.: Rising wage inequality: The role of composition and prices, NBER Working Paper (2005)
Banerjee, B., Knight, J.B.: Caste discrimination in the Indian urban labour market. J. Dev. Econ. 17(3), 277–307 (1985)
Bera, A., Galvao, A., Wang, L.: On testing the equality of mean and quantile effects. J. Econ. Methods 3(1), 47–62 (2014)
Blinder, A.: Wage discrimination: Reduced form and structural estimates. J. Human Resour. 8(4), 436–455 (1973)
Borjas, G.J.: Long-Run Convergence of ethnic skill differentials: The children and grandchildren of the great migration. Ind. Labor Relat. Rev. 47(4), 453–573 (1994)
Chernozhukov, V., Fernández-Val, I., Galichon, A.: Improving point and interval estimators of monotone functions by rearrangement. Biometrika 96(3), 559–575 (2009)
Chernozhukov, V., Fernández-Val, I., Galichon, A.: Quantile and probability curves without crossing. Econometrica 78(3), 1093–1125 (2010)
Darity, W.A., Mason, P.L.: Evidence on discrimination in employment: Codes of colour and codes of gender. J. Econ. Perspect. 12(2), 63–90 (1998)
Firpo, S., Fortin, N., Lemieux, T.: Unconditional quantile regressions. Econometrica 77(3), 953–973 (2009)
Fortin, N., Lemieux, T., Firpo, S.: In: Ashenfelter, O., Card, D. (eds.) Decomposition Methods in Economics, vol. 4, pp. 1–12. Elsevier, Amsterdam (2011)
He, X.: Quantile curves without crossing. Am. Stat. 51, 186–192 (1997)
Koenker, R.: Quantile Regression. Cambridge University Press, Cambridge (2005)
Koenker, R., Bassett, G.W.: Regression quantiles. Econometrica 46, 33–49 (1978)
Koenker, R., Bassett, G.W.: Tests of linear hypothesis and l 1 estimation. Econometrica 50, 1577–1584 (1982)
Koenker, R., Xiao, Z.: Quantile autoregression. J. Am. Stat. Assoc. 101, 980–990 (2006)
Machado, J.A.F., Mata, J.: Counterfactual decomposition of changes in wage distributions using quantile. J. Appl. Econ. 20, 445–465 (2005)
Mainali, R., Jafarey, S., Montes-Rojas, G.: Earnings and social background: An evaluation of caste/ethnic wage differentials in the Nepalese labour market. J. Dev. Studies 53(3), 396–421 (2017)
Oaxaca, R.L.: Male-Female Wage differentials in urban labor markets. Int. Econ. Rev. 14(3), 693–709 (1973)
Oaxaca, R.L., Ransom, M.R.: On discrimination and the decomposition of the wage differentials. J. Econ. 61, 5–21 (1994)
We are grateful to the Associate Editor Prof. V. Dardanoni and to an anonymous reviewer for constructive comments and suggestions. This research has been partially supported by grants ECO2013-46516-C4-1-R (Equity and Poverty: Methods and Implications, Ministerio de Economía y Competitividad, Gobierno de España) and SGR2014-1279 (Equity and Development Research Group, Generalitat de Catalunya).
About this article
Cite this article
Montes-Rojas, G., Siga, L. & Mainali, R. Mean and quantile regression Oaxaca-Blinder decompositions with an application to caste discrimination. J Econ Inequal 15, 245–255 (2017). https://doi.org/10.1007/s10888-017-9355-9
- Quantile regression
- Oaxaca-Blinder decomposition