Dear Ben,
Thanks a lot for your help!
Ellen
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Ben Jann
Sent: 09 June 2006 23:48
To: [email protected]
Subject: st: RE: significance of grouped contributions in Oaxaca
decomposition
Ellen Van de Poel wrote:
> I use the command : oaxaca group1 group2, de esave
>
> to generate detailed Oaxaca decomposition results.
>
> Thereafter I want to group the contributions of some binary variables
> that result from a categorical one. E.g. I want to group
contributions
> from all the (binary) income quintiles to get a general contribution
> for income.
> To get the statistal significance of this grouped contribution I use
> the command :
>
> nlcom (wealthcon:
> _b[quintile1]+_b[quintile2]+_b[quintile3]+_b[qquintile4])
>
> Now, the problem is that this only works for the "endowments
> contribution". Through the _b[] command I cannot seem to get the
> contributions from the coefficient and interaction effects.
There are two issues:
First, and most important, -nlcom- will not produce correct results
concerning "statistal significance" in any case. Here is the description
of the -esave- option from the -oaxaca- help file:
esave specifies that the results be returnd in e(). This is useful,
e.g., if you want to use -bootstrap- with oaxaca. Note that the
off-diagonal elements in e(V) will be set to zero since oaxaca does
not provide the covariances among the various decomposition
components. Do not apply -lincom- or similar techniques to the
returned results. Also do not use -predict-.
Clearly, -nlcom- is one of these "similar techniques". The reason why
-nlcom- or -lincom- do not compute correct results is that -oaxaca-
just sets all covariances in e(V) to zero. This, in fact, is also the
reason why -oaxaca- does not return its results in e() by default. I
just added the -esave- option to facilitate tasks such as
bootstraping.
The correct way to compute combined effects is to group variables
using the detail option. For example, Ellen could type
. oaxaca group1 group2, detail(quintile=quintile*)
The contributions of all the quintile variables would then be combined
internally and the correct standard error will be reported.
Second, the results stored by -oaxaca- in e(b) and e(V) are organized
in several "equations". For example, -oaxaca group1 group2, de esave-
will save three equations: "endowments", "coefficients", and
"interaction". Ellen can access the the results for the different
equations as follows:
endowments equation: _b[quintile1] or [endowments]_b[quintile1]
coefficients equation: [coefficients]_b[quintile1]
interaction equation: [interaction]_b[quintile1]
ben
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