An Application of Blinder-Oaxaca Decomposition in Explaining Gender Difference of Earnings in Tehran

Income inequality is sometimes appeared as the gap between two gender groups. Adequate observations relevant to this type of income inequality have tempted economists to find the causes of this phenomenon and measure its width. The isolation of discrimination from that part of income gap which is explained by productivity of men and women is on the focus. Identifying the portion of discrimination (unexplained) and explained earning gender gap by using Blinder-Oaxaca decomposition procedure on the basis of two samples in Tehran is the main goal of this paper. The data have been gathered by questionnaire in 2012. Findings suggest that approximately 41% of the earning gap of sexes is attributed to the difference in human capital and another 59% is related to discrimination. Additionally, work experience is the dominant cause of gender earning gap.