6.4 Decomposition Methodology

This research uses the standard Blinder-Oaxaca decomposition shown in equation 5 in Appendix A. An alternative pooled method, suggested by Oaxaca and Ransom (1994), uses the cross-product matrices as the weighting matrix in the regression. This weighting method is assumed to create the wage structure that would have occurred if wage discrimination had not existed. As the current research is concerned with the gender pay gap given historical wage discrimination, the standard decomposition weighting method is used.

While both datasets come from census information on Public Service employees, the data cleaning process resulted in the removal of observations with missing values. Given this, and the fact that the data arise from an observational study rather than an experiment (i.e., values of the predictor variables are not fixed experimentally), the decompositions are based on random effects models rather than fixed effects models. This distinction simply means that the decomposition findings are estimates of the relationship between the predictor variables and ln_wages.

SPSS version 10 was used for the data analysis, and the full model was specified in each regression.

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