oaxaca

The Blinder–Oaxaca decomposition for linear regression models. The counterfactual decomposition technique popularized by Blinder (1973, Journal of Human Resources, 436–455) and Oaxaca (1973, International Economic Review, 693–709) is widely used to study mean outcome differences be- tween groups. For example, the technique is often used to analyze wage gaps by sex or race. This article summarizes the technique and addresses several compli- cations, such as the identification of effects of categorical predictors in the detailed decomposition or the estimation of standard errors. A new command called oaxaca is introduced, and examples illustrating its usage are given.