ob_decompose_calculate_vcov {ddecompose}

Calculate covariance matrix for OB decomposition terms

Description

The function calculate the covariance matrix for the decomposition terms of the linear Oaxaca-Blinder decomposition assuming independence between groups.

Usage

ob_decompose_calculate_vcov(
  beta0,
  beta1,
  X0,
  X1,
  weights0,
  weights1,
  Cov_beta0,
  Cov_beta1,
  reference_0
)

Arguments

beta0

vector of estimated coefficients of group 0

beta1

vector of estimated coefficients of group 1

X0

model.matrix of group 0

X1

model.matrix of group 1

weights0

vector of observation weights of group 0

weights1

vector of observation weights of group 1

Cov_beta0

estimated covariance matrix of coefficients of group 0

Cov_beta1

estimated covariance matrix of coefficients of group 1

reference_0

boolean: indicating if group 0 is the reference group and if its coefficients are used to compute the counterfactual mean.

References

Jann, Ben, 2005. "Standard errors for the Blinder-Oaxaca decomposition." *3rd German Stata Users’ Group Meeting 2005*. Available from [https://boris.unibe.ch/69506/1/oaxaca_se_handout.pdf](https://boris.unibe.ch/69506/1/oaxaca_se_handout.pdf).