# Re: st: Oaxaca decomposition for beginners

 From "Ben Jann" To statalist@hsphsun2.harvard.edu Subject Re: st: Oaxaca decomposition for beginners Date Mon, 21 Apr 2008 09:53:13 +0200

```Khalis, the -oaxaca- package has an extensive help file (including a
"Methods and Formulas" Section). See

. help oaxaca

Possibly also read some of the cited literature.
ben

On Fri, Apr 18, 2008 at 2:23 PM,  <A.K.Abdul-Karim@warwick.ac.uk> wrote:
> Hello statalist members,
>
>  I'm new to statistics and Stata. I just follow the example in the help
>  file but unfortunately I'm not able to interpret the output. I wish to
>  test for wage discrimination amongst European and non-European footballers
>  using the Oaxaca method. Here is what I did:
>
>  . reg logwages caps apps asiprob golprob ycprob rcprob if eu==0
>
>  . est sto noneu
>
>  . reg logwages caps apps asiprob golprob ycprob rcprob if eu==1
>
>  . est sto yeseu
>  . oaxaca yeseu noneu
>  (high estimates: noneu; low estimates: yeseu)
>
>                                                  Mean prediction 1 =
>  10.29027
>                                                  Mean prediction 2 =
>  10.08027
>  ------------------------------------------------------------------------------
>              |      Coef.   Std. Err.      z    P>|z|     [95% Conf.
>  Interval]
>  -------------+----------------------------------------------------------------
>   difference |   .2100054   .0809862     2.59   0.010     .0512754
>  .3687354
>  ------------------------------------------------------------------------------
>
>  Linear decomposition
>  ------------------------------------------------------------------------------
>        Total |      Coef.   Std. Err.      z    P>|z|     [95% Conf.
>  Interval]
>  -------------+----------------------------------------------------------------
>  three-fold   |
>   endowments |   .0831522   .0588726     1.41   0.158     -.032236
>  .1985405
>  coefficients |   .1430246   .0879633     1.63   0.104    -.0293803
>  .3154294
>   interaction |  -.0161714   .0717465    -0.23   0.822     -.156792
>  .1244493
>  ------------------------------------------------------------------------------
>
>  . oaxaca noneu yeseu, weight(1 0.5 0 omega)
>  (high estimates: noneu; low estimates: yeseu)
>
>                                                  Mean prediction 1 =
>  10.29027
>                                                  Mean prediction 2 =
>  10.08027
>  ------------------------------------------------------------------------------
>              |      Coef.   Std. Err.      z    P>|z|     [95% Conf.
>  Interval]
>  -------------+----------------------------------------------------------------
>   difference |   .2100054   .0809862     2.59   0.010     .0512754
>  .3687354
>  ------------------------------------------------------------------------------
>
>  Linear decompositions
>  ------------------------------------------------------------------------------
>        Total |      Coef.   Std. Err.      z    P>|z|     [95% Conf.
>  Interval]
>  -------------+----------------------------------------------------------------
>  W=1          |
>    explained |   .0669809   .0689001     0.97   0.331    -.0680609
>  .2020226
>   unexplained |   .1430246   .0879633     1.63   0.104    -.0293803
>  .3154294
>  -------------+----------------------------------------------------------------
>  W=,5         |
>    explained |   .0750665    .053101     1.41   0.157    -.0290095
>  .1791426
>   unexplained |   .1349389   .0758584     1.78   0.075    -.0137409
>  .2836186
>  -------------+----------------------------------------------------------------
>  W=0          |
>    explained |   .0831522   .0588726     1.41   0.158     -.032236
>  .1985405
>   unexplained |   .1268532   .0796571     1.59   0.111    -.0292718
>  .2829781
>  -------------+----------------------------------------------------------------
>  W=omega      |
>    explained |   .0824304   .0512448     1.61   0.108    -.0180075
>  .1828683
>   unexplained |    .127575    .067142     1.90   0.057     -.004021
>  .259171
>  ------------------------------------------------------------------------------
>
>
>  My questions are:
>  1) Am I doing the right thing? (i.e. decomposition)
>  2) How do I use the result to make an interpretation? How much of the
>  difference is explained vs. unexplained?
>  3) What is the command weight(1 0.5 0 omega) for?
>
>  I'm really new to all this and hope you guys don't feel annoyed if my
>  questions are too basic.
>
>  Thanks.
>  Khalis.
>
>
>  *
>  *   For searches and help try:
>  *   http://www.stata.com/support/faqs/res/findit.html
>  *   http://www.stata.com/support/statalist/faq
>  *   http://www.ats.ucla.edu/stat/stata/
>
*
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```