Faculty Publications

Decomposing Joint Distributions Via Reweighting Functions: An Application To Intergenerational Economic Mobility

Document Type

Article

Keywords

counterfactual joint distribution, Decomposition, intergenerational mobility

Journal/Book/Conference Title

Econometric Reviews

Volume

39

Issue

6

First Page

541

Last Page

558

Abstract

We introduce a method that extends the traditional Oaxaca-Blinder decomposition to both the full distribution of an outcome of interest and to settings where group membership varies along a continuum. We achieve this by working directly with the joint distribution of outcome and group membership and comparing it to an independent joint distribution. Like all decompositions, we assume the difference is partially due to differences in characteristics between groups (a composition effect) and partially due to differences in returns to characteristics between groups (a structure effect). We use reweighting functions to estimate a counterfactual joint distribution representing the hypothetical if characteristics did not vary according to group while returns to characteristics did. The counterfactual allows us to decompose differences between the empirical and independent distributions into composition and structure effects. We demonstrate the method by decomposing multiple measures of immobility for white men in the U.S.

Department

Department of Economics

Original Publication Date

7-2-2020

DOI of published version

10.1080/07474938.2019.1697088

Repository

UNI ScholarWorks, Rod Library, University of Northern Iowa

Language

en

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