Recently, there has been a growing interest in reducing gender and race discrimination. Hence, the interest in exploring what causes the discriminatory wage gap has also grown. An often applied tool for this type of analysis is the Oaxaca-Blinder decomposition technique. However, it turns out that this technique is inadequate when it comes to calculation of separate contributions to discrimination for indicator variables. This is because the contributions are not robust against a change of reference group. In this paper the Oaxaca-Blinder decomposition is extended to handle this problem.
Applied Economics Letters, 2000, Vol Vol. 7, Issue nr. 6, p. 405-408