Handbook of Research Methods on the Quality of Working Lives
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Handbook of Research Methods on the Quality of Working Lives

Edited by Daniel Wheatley

The growing diversity of contemporary paid work has provoked increased interest in understanding and evaluating the quality of working lives. This Handbook provides critical reflections on recent research in the field, including examining the inextricable links between working life and well-being.
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Chapter 16: Using the Oaxaca–Blinder decomposition to quantitatively assess the gender pay gap

Michaela Fuchs, Anja Rossen, Antje Weyh and Gabriele Wydra-Somaggio

Abstract

There are a number of theories that seek to explain why women earn less than men. Empirical applications usually test these theories by taking gender-specific differences in individual and workplace-related characteristics into account. This chapter provides an overview of the most commonly used method to quantify the contribution of these factors developed by Oaxaca and Blinder. It decomposes the mean difference in the wages of men and women into a part that is explained by observable factors and into an unexplained part. The latter represents an indicator of the extent of gender discrimination in payment. However, the fact that the unexplained part also comprises the influence of endowment differences in unobserved characteristics between men and women can lead to an overestimation of the real level of discrimination. Therefore, in this chapter we discuss the challenges encountered in the quantitative assessment of wage differences.

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