%0 Report
        %A Heitmueller, Axel
        %T A Note on Decompositions in Fixed Effects Models in the Presence of Time-Invariant Characteristics
        %D 2005
        %8 2005 Dec
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 1886
        %U https://www.iza.org/publications/dp1886
        %X Though theoretically appealing and very popular amongst labour economists, the interpretation of the unexplained part of the Oaxaca (1973) decomposition as discrimination rather than an omitted variable problem in cross-section data has often been criticised. In this note it is shown that this problem extends also to panel data and moreover that in a fixed effects model including time invariant regressors omitted variables are a necessary and deliberate consequence. Monte Carlo simulation is used to show the extent of the bias. Special cases and practical implications are discussed.
        %K decomposition
%K fixed effects
%K Monte Carlo study