Dear all,
I am trying to use an Oaxaca- Blinder decomposition to see if a variable of interest contributes to the gender wage gap.
However, I would like to use an instrumental variable in place of my variable of interest in the decomposition.
1) Is there a command that combines the oaxaca command with use of an IV?
2) Alternatively, can I create the instrument variable and then put it directly instead of my original variable in the oaxaca command? If I do this, I suppose I will have to somehow change my standard errors to correct for the fact that my instrument is estimated to begin with. How might I change my standard errors?
3) Is there a reference to a paper that has done something similar? Does anyone know if this is even econometrically sound and if yes/ no, why?
Many thanks!
Best regards,
Adi
I am trying to use an Oaxaca- Blinder decomposition to see if a variable of interest contributes to the gender wage gap.
However, I would like to use an instrumental variable in place of my variable of interest in the decomposition.
1) Is there a command that combines the oaxaca command with use of an IV?
2) Alternatively, can I create the instrument variable and then put it directly instead of my original variable in the oaxaca command? If I do this, I suppose I will have to somehow change my standard errors to correct for the fact that my instrument is estimated to begin with. How might I change my standard errors?
3) Is there a reference to a paper that has done something similar? Does anyone know if this is even econometrically sound and if yes/ no, why?
Many thanks!
Best regards,
Adi
