A nonparametric analysis of the black/white wage gap

Abstract

This article estimates a nonparametric model of earnings to examine the black/white wage gap. This article extends the Oaxaca decomposition and adjusted wage ratios to a nonlinear form, to allow the use of this nonparametric approach. It finds that the results obtained nonparametrically are very similar to those obtained with variants of the (misspecified) Mincer model, suggesting that the parametric models may be appropriate in situations where the nonparametric estimator could not be applied.