The Blinder Oaxaca decomposition method for defining wage differentials (generally referred to as discrimination) from the wage equations of two groups has had a wide degree of application. However, the decomposition measures can very dramatically depending on the definition of the non-discriminatory wage chosen for comparison. This paper uses a form of extreme bounds analysis to define the limits on the measure of discrimination that can be obtained from these decompositions. A simple application is presented to demonstrate the use of the bootstrap to define the distributions of the discrimination measure.
Hirschberg, J.G. and Slottje, D.J. (2004), "BOUNDING ESTIMATES OF WAGE DISCRIMINATION", Polachek, S.W. (Ed.) Accounting for Worker Well-Being (Research in Labor Economics, Vol. 23), Emerald Group Publishing Limited, Bingley, pp. 215-233. https://doi.org/10.1016/S0147-9121(04)23006-0
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