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Oaxaca-Blinder decomposition with dummy variables Oaxaca requires to use each variable's average to calculate the pay difference. While calculating the difference between Black and white

Oaxaca-Blinder decomposition with dummy variables

Oaxaca requires to use each variable's average to calculate the pay difference.

While calculating the difference between Black and white NBA players, should I drop the dummy variable? If not, how does dummy variables involve in the calculation

Assume:

black's wage=10+2*total games +2*pts + 2*height + 2*college

white's wage=11+3*total games +3*pts + 3*height + 3*college

(college is the dummy variable, which indicates if the player has a college degree)

Note: do not use stata or any program, please show the math.

you can also have your own example if you prefer.

Thanks.

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