Considering YM = 40, 000 and YF = 28, 000, YM and YF are average earnings for males and females respectively. The following are estimated simple human capital earning functions: ln YM = 9.2 + 0.1SM, SM = 14; ln YF = 9.4 + 0.07SF; SF = 12; SM and SF are average school years for male and female respectively.
-Using Oaxaca decomposition, the unexplained differentials are (in logarithms) ?
A) 0.36
B) 0.85
C) 0.20
D) 0.70
E) 0.16
Correct Answer:
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