Using the Oaxaca-Blinder Decomposition Technique to Analyze Learning Outcomes Changes over Time: An Application to Indonesia’s Results in PISA Mathematics

Abstract

The Oaxaca-Blinder technique was originally used in labor economics to decompose earnings gaps and to estimate the level of discrimination. It has been applied since in other social issues, including education, where it can be used to assess how much of a gap is due to differences in characteristics (explained variation) and how much is due to policy or system changes (unexplained variation). The authors apply the decomposition technique in an effort to analyze the increase in Indonesia’s score in PISA mathematics. Between 2003 and 2006, Indonesia’s score increased by 30 points, or 0.3 of a standard deviation. The test score increase is assessed in relation to family, student, school and institutional characteristics. The gap over time is decomposed into its constituent components based on the estimation of cognitive achievement production functions. The decomposition results suggest that almost the entire test score increase is explained by the returns to characteristics, mostly related to student age. However, the authors find that the adequate supply of teachers also plays a role in test score changes.