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The change in men’s hourly wages for a specified period minus the change in women’s hourly wages for the same period is equal to the sum of two components. Each component is calculated as the difference between two expressions.
In the first component, the first expression is the difference in mean male characteristics between the beginning and end points multiplied by the estimated male coefficients for the end point. The second expression is the difference in mean female characteristics between the beginning and end points multiplied by the estimated female coefficients for the end point. The female expression is subtracted from the male expression.
In the second component, the first expression is the difference in estimated male coefficients between the beginning and end points multiplied by the mean male characteristics for the beginning point. The second expression is the difference in estimated female coefficients between the beginning and end points multiplied by the mean female characteristics for the beginning point. The female expression is subtracted from the male expression.