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st: Interpretation of Oaxaca-decomposition
Dear statalist members,
I would like to consult the list on some basic, partly non-technical
questions regarding the Oaxaca-decompostion, or regression decomposition.
My setting: I have 2 regions (factor1) with 5 groups (factor2) within
each region. I run normal regressions including dummies etc, and now
would like to decompose the differences of the mean depvar between
different groups, e.g. group1-group5 in region=1, group1-group5 in
region=2, etc., being esp. interested in the explained part of the
decomposition (differences in means of the independent variables).
Using Ben Jann`s "oaxaca"-routine with the overall pooled regression as
the reference I get e.g. the following basic results: The explained
portion of the difference in the mean of depvar in region 1 is ca.
85-90%, in region 2 it is around 110%. Now,
1) is it correct to state that in region 1 the difference in the mean
depvar is higher than the mean differences in the independent variables
would suggest (given the included variables), whereas in region 2 the
mean difference of the depvar should be higher, thus that in region 1
there seem to be factors / variables at work which lead to a larger
difference, whereas in region 2 there seem to be factors working in the
opposite direction, given the included independent variables?
2) Esp. in region 2 there is some problem regarding between-group
heteroscedasticity. Is there a way to solve this, or would it be correct
to e.g. use a WLS-regression with groupspecific analytical weights as a
pooled reference for the regression composition?
Thanx in advance for comments and suggestions,
Jochen
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