Oaxaca-Blinder decomposition of log wage gaps between social groups
Reference group: Upper Caste (General) male regular wage workers · PLFS 2019–20
ILLUSTRATIVE SAMPLE · Indicative values based on published literature
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The Oaxaca-Blinder decomposition splits an observed wage gap between two groups into two parts:
the Explained component — due to measurable differences in education, work experience, occupation, sector, and location —
and the Unexplained component, which captures the wage penalty that persists after equalising all observed characteristics.
The unexplained component is the standard empirical measure of labour market discrimination.
It represents what a worker from a disadvantaged group would lose relative to the reference group even if they held identical qualifications, occupation, and location.
Values are log-point gaps; approximate percentage gap = exp(log gap) – 1.
Wage Gap Decomposition by Caste Group — vs. Upper Caste Reference
Regular wage workers. Dependent variable: log monthly wages. Controls: education, potential experience, industry, occupation, rural/urban, state.
Gaps are relative to upper caste (General) male workers.
Explained (human capital, location, sector)
Unexplained (discrimination premium)
Total gap
Highest discrimination penalty
ST workers: 24 log pts
The unexplained penalty for ST workers equals that of SC workers despite a larger total gap, because ST workers also face larger explained disadvantages — lower average education, rural concentration, agricultural sector.
SC explained vs unexplained
~50/50 split
For SC workers, roughly half the total gap reflects measurable human capital differences and half reflects residual discrimination — consistent across multiple NSSO and PLFS rounds since 2004–05.
Muslim workers
23 log pts unexplained
Muslim workers show the highest unexplained share relative to total gap, consistent with India Discrimination Report 2022 findings on labour market exclusion by religious identity.
OBC convergence
Gap narrowing since 2004
OBC total gap has declined across NSSO rounds, driven primarily by reduction in the explained component (education convergence). Unexplained component has remained more stable at 10–13 log points.
Group (vs. Upper Caste reference)
Explained (log pts)
Unexplained (log pts)
Total gap (log pts)
Unexplained share
Scheduled Caste (SC)
22
22
44
50%
Scheduled Tribe (ST)
29
24
53
45%
Other Backward Class (OBC)
15
12
27
44%
Muslim (regular wage workers)
19
23
42
55%
Gender Wage Gap Decomposition — Women vs. Men, by Social Group
Regular wage workers. Dependent variable: log monthly wages. Controls: education, experience, industry, occupation, rural/urban, state.
Comparison within each social group: women relative to men in same group.
Explained
Unexplained (discrimination)
Social Group
Explained (log pts)
Unexplained (log pts)
Total gender gap
Unexplained share
Upper Caste (General)
9
17
26
65%
OBC
11
20
31
65%
SC
10
23
33
70%
ST
12
25
37
68%
Intersection of Caste and Gender — Cumulative Wage Penalty
Total unexplained wage penalty faced by women from each social group, relative to upper caste men.
Combines caste-based and gender-based discrimination components.
The double penalty for SC and ST women is not simply additive; interaction effects have been modelled separately.
Caste penalty (unexplained)
Additional gender penalty
Interaction (caste × gender, not purely additive)
Intersectionality note: SC and ST women face a compounded penalty that exceeds the simple sum of their caste penalty and gender penalty. The interaction term — captured in the third bar segment — reflects the additional disadvantage that cannot be explained by either caste or gender alone. This is consistent with Thorat and Newman's (2010) audit evidence showing that caste identity and gender identity interact in hiring discrimination, not merely compound.
Data and methodology: Values are illustrative estimates consistent with the published literature on labour market discrimination in India, particularly
Thorat, Attewell and Madheswaran (2022) India Discrimination Report (Oxford University Press);
Madheswaran and Attewell (2007), Economic and Political Weekly;
and Azam (2012), Journal of Development Studies.
Decomposition method: Oaxaca (1973) / Blinder (1973) procedure using regular wage worker sample from PLFS 2019–20.
Log-point gaps are approximate; exact figures vary by reference period, sample restriction, and control set.
This visualisation is an illustrative sample of Pinpoint Ventures' quantitative analysis work and does not constitute primary research output.
| ILLUSTRATIVE SAMPLE — Pinpoint Ventures Advisory LLP — pinpointventures.in