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st: oaxaca decomposition

From   "Andrey V. Ivanov" <>
Subject   st: oaxaca decomposition
Date   Tue, 20 Jun 2006 15:17:34 +0200

Dear all,

I am trying to use Oaxaca-type decomposition of a wage equation with selection effects, as discussed in Neuman and Oaxaca, "Estimating labor market discrimination with selectivity-corrected wage equations: methodological considerations and an illustration from Israel", discussion paper 2-2003 from the Pinhas Sapir Center for Development at Tel-Aviv U.

It seems that all the standard decomposers (like oaxaca) in Stata adjust the wage equations for selectivity, and then decompose the adjusted difference into explained and unexplained effect.

Say, I have the following model:

y1 = x1b1 + s1c1
y2 = x2b2 + s2c2,

where s is the selection variable. Then, the standard Stata procedure would do the following, as far as I understand:
adjust y1-y2 with s1c1 - s2c2, and then decompose this adjusted difference into:

(x1 - x2)b1 + x2(b1-b2)

However, as in the above paper, I want to have three decomposition terms:

(x1 - x2)b1 + x2(b1-b2) + (s1c1 - s2c2),

such that I can further decompose the selection term, (s1c1 - s2c2). This involves calculating s0 = f(h2g1)/F(h2g1), where g1 is the estimated parameter from the selection model of the sample 1 and h2 are the characteristics that enter the selection model for sample 2, F is normal CDF and f is normal PDF. (see paper above, pp. 5 and 8)

Could anyone assist me with how to calculate this f/F ratio in stata?

andrey v. ivanov

Chair for Applied Microeconomics, Department of
Economics, Mannheim University, D-68131 Mannheim, Germany
Co-editor of JEPS:

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