Wage discrimination in Zambia: an extension of the Oaxaca-Blinder decomposition

Abstract

Recently, there has been growing interest in reducing gender and race discrimination. Hence, interest in exploring what causes the discriminatory wage gap has also grown. An often applied tool for this type of analysis is the Oaxaca-Blinder decomposition technique. However, it turns out that this technique is inadequate when it comes to calculation of separate contributions to discrimination for indicator variables. This is because the contributions are not robust against a change of reference group. In this paper the Oaxaca-Blinder decomposition is extended to handle this problem.