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Normalized Equation and Decomposition Analysis: Computation and Inference

Author

Listed:
  • Yun, Myeong-Su

    (Inha University)

Abstract
This paper joins discussions on normalized regression and decomposition equations in devising a simple and general algorithm for obtaining the normalized regression and applying it to the Oaxaca decomposition. This resolves the invariance problem in the detailed Oaxaca decomposition. An algorithm to calculate an asymptotic covariance matrix for estimates in the normalized regression for hypothesis testing is also derived. We extend these algorithms to non-linear equations where the underlying equation is linear and decompose differences in the first moment.

Suggested Citation

  • Yun, Myeong-Su, 2005. "Normalized Equation and Decomposition Analysis: Computation and Inference," IZA Discussion Papers 1822, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1822
    as

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    File URL: https://docs.iza.org/dp1822.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Carlos Gradin, 2009. "Why is Poverty So High Among Afro-Brazilians? A Decomposition Analysis of the Racial Poverty Gap," Journal of Development Studies, Taylor & Francis Journals, vol. 45(9), pages 1426-1452.
    3. Moral De Blas, Alfonso & Martín-Román, Ángel & Rodríguez Caballero, Juan Carlos, 2013. "El papel de las ETTs en la reducción del riesgo moral asociado al seguro por accidentes de trabajo: El caso de España/The Role of the TWAs in the Reduction of Moral Hazard in Workplace Accident Insura," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 31, pages 497-522, Septiembr.
    4. Chung, Woojin & Lim, Seungji & Lee, Sunmi, 2010. "Factors influencing gender differences in smoking and their separate contributions: Evidence from South Korea," Social Science & Medicine, Elsevier, vol. 70(12), pages 1966-1973, June.
    5. Mariana Amorim & Laura M. Tach, 2019. "Multiple-Partner Fertility and Cohort Change in the Prevalence of Half-Siblings," Demography, Springer;Population Association of America (PAA), vol. 56(6), pages 2033-2061, December.
    6. Altay Mussurov & G Arabsheibani, 2015. "Informal self-employment in Kazakhstan," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-19, December.
    7. Albert López-Ibor, Rocío & Escot Mangas, Lorenzo & Fernández Cornejo, José Andrés, 2010. "La predisposición de las estudiantes universitarias a auto-limitarse profesionalmente en el futuro por razones de conciliación/The Predisposition of Feminine University Students to Professional Self-L," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 28, pages 203(32á)-20, Abril.
    8. Mihails Hazans & Ija Trapeznikova & Olga Rastrigina, 2008. "Ethnic and parental effects on schooling outcomes before and during the transition: evidence from the Baltic countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 719-749, July.
    9. Fossen, Frank M., 2019. "Entrepreneurship over the Business Cycle in the United States: A Decomposition," IZA Discussion Papers 12499, Institute of Labor Economics (IZA).
    10. Crentsil, Aba Obrumah & Asuman, Derek & Fenny, Ama Pokuaa, 2019. "Assessing the determinants and drivers of multidimensional energy poverty in Ghana," Energy Policy, Elsevier, vol. 133(C).
    11. Nyasha Mutanda & Clifford O. Odimegwu, 2019. "Solitary living in South Africa: what is driving the pattern and change?," Journal of Population Research, Springer, vol. 36(2), pages 137-158, June.
    12. Moral De Blas, Alfonso & Martín Román, Ángel & Rodríguez Caballero, Juan Carlos, 2010. "La antigüedad y las diferencias de esfuerzo entre trabajadores de distintas zonas geográficas: un estudio de los accidentes de trabajo/Seniority and Relative Effort Exercised by Workers from Different," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 28, pages 201(20á)-20, Abril.
    13. Frank M. Fossen, 2021. "Self-employment over the business cycle in the USA: a decomposition," Small Business Economics, Springer, vol. 57(4), pages 1837-1855, December.

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    More about this item

    Keywords

    normalized regression; detailed decomposition; invariance; identification; characteristics effect; coefficients effect;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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