| Skip this section if you are afraid of mathematics! The first step in the process of the decomposition into factors is to identify the structural elements (which derive from the individual's life situation, level of education and other objective circumstances) which determine the individual's income, based on a regression analysis performed separately for women and men. The income inequality is defined as the difference between the natural logarithm of the average income of men and women. Assuming that men's income is free of discrimination while women's is not, we can calculate a theoretical value which refers to the theoretical average of the women's income in the case of no discrimination. Then we can compute how much the men's income exceeds the average discrimination-free income of women. This difference is due to the structural effect which derives from the fact that women's objective circumstances differ from those of men's. The remaining part of the difference between the actual income of men and women can be accounted for by discrimination. |
