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Causal Pitfalls in the Decomposition of Wage Gaps

Huber, Martin

In: Journal of business & economic statistics, 2015, vol. 33, no. 2, p. 179-191

The decomposition of gender or ethnic wage gaps into explained and unexplained components (often with the aim to assess labor market discrimination) has been a major research agenda in empirical labor economics. This article demonstrates that conventional decompositions, no matter whether linear or nonparametric, are equivalent to assuming a (probably too) simple model of mediation (aimed at...