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# Re: st: To: Statalist <statalist@hsphsun2.harvard.edu>

 From Fernando Rios Avila To statalist@hsphsun2.harvard.edu Subject Re: st: To: Statalist Date Tue, 13 Nov 2012 21:02:32 -0500

```The problem is that you are not using any of the right options in the
-oaxaca- command. For instance, what you are referring to is a two
fold decomposition, whereas by default Oaxaca does a three fold
decomposition (for more detail look at the paper and documentation).
For instance, if you do :
oaxaca y x, by(d) probit nodetail  weight(0)
you will have the results in the more traditional two fold way.
(again, look at the documentation)
HTH
Fernando

On Tue, Nov 13, 2012 at 8:55 PM, Dimitriy V. Masterov
<dvmaster@gmail.com> wrote:
> I am trying to make sense of the results of a Oxaca-Blinder
> decomposition produced by Ben Jann's oaxaca command (version 4.0.5
> from ssc). I have a binary outcome y, a single continuous explanatory
> variable x (0-100), and a binary group indicator d:
>
> oaxaca y x, by(d) probit nodetail
>
> Blinder-Oaxaca decomposition                      Number of obs   =    2178524
>                                                   Model           =     probit
> Group 1: DElectronics_1 = 0                       N of obs 1      =    1612480
> Group 2: DElectronics_1 = 1                       N of obs 2      =     566044
>
> ------------------------------------------------------------------------------
>    bbe_flag1 |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
> -------------+----------------------------------------------------------------
> overall      |
>      group_1 |   .0617275   .0001892   326.25   0.000     .0613567    .0620983
>      group_2 |   .0698966   .0003379   206.85   0.000     .0692343    .0705589
>   difference |  -.0081692   .0003873   -21.09   0.000    -.0089282   -.0074101
>   endowments |  -.0135059   .0001323  -102.10   0.000    -.0137651   -.0132466
> coefficients |   .0024407   .0004099     5.95   0.000     .0016374     .003244
>  interaction |    .002896   .0001549    18.69   0.000     .0025924    .0031996
> ------------------------------------------------------------------------------
>
> The rate for Group 2 is about 0.8 of a percent point higher. That can
> be broken out as the sum:
> (1) the difference due to different characteristics x (-1.35)
> (2) the difference in the effect of x on y (+0.24)
> (3) interaction (+0.3)
>
> In the draft version of Yun's 2004 paper (link below), I only see two
> terms that correspond to (1) and (2) above in the probit example. The
> interaction seems to be a sort of residual. Where does it come from?
>
> Finally, using the SJ version of Yun's mvdcmp command, also produces
> only two terms. His difference due to coefficients seems to be the sum
> of (2) and (3) from above.
>
> DVM
>
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```