Which of the following is NOT true of the Oaxaca transformation?
A) The Oaxaca transformation compares the actual earnings of the average majority member with the hypothetical earnings of the average minority member were he endowed with the same average productivity as the majority member.
B) The Oaxaca transformation allows for an appropriate apples-to-apples comparison.
C) The residual of the Oaxaca transformation captures the extent of wage discrimination.
D) The observed wage gap of the Oaxaca transformation is equivalent to the productivity differences between the majority and minority groups.
E) The Oaxaca transformation calculates predicted earnings for an average minority member.

Question

Quizplus · Accepted Answer

The observed wage gap of the Oaxaca transformation is NOT equivalent to the productivity differences between the majority and minority groups. The observed wage gap is decomposed into the part that is explained by differences in productivity and the part that is due to discrimination.

Which of the Following Is NOT True of the Oaxaca