Question

In a Oaxaca decomposition, the “unexplained" portion of the wage gap is typically thought to: a. Overstate the true extent of discrimination if there are no unobservable skill differences between the groups. b. Overstate the true extent of discrimination if discrimination leads to observable skill differences between the groups. C. Understate the true extent of discrimination if discrimination leads to observable skill differences between the groups. d. Understate the true extent of discrimination if the group with lower earnings is also less skilled along dimensions that are not captured in the data.

Answer 1

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