Matching as a Tool to Decompose Wage Gaps

This paper presents a methodology that uses matching comparisons to explain gender wage differences. The approach emphasizes gender differences in the supports of the distributions of observable characteristics and provides insights into the distribution of unexplained gender pay differences. This nonparametric alternative to the Blinder-Oaxaca (BO) decomposition does not require the estimation of earnings equations and divides the gap into four additive elements. Two of these are analogous to the elements of the BO decomposition (but computed only over the common support of the distributions of characteristics), while the other two account for differences in the supports.