The Center for Retirement Research at Boston College, part of a consortium that includes parallel centers at the University of Michigan and the National Bureau of Economic Research, was established in 1998 through a grant from the Social Security Administration. The Center's mission is to produce first-class research and forge a strong link between the academic community and decision makers in the public and private sectors around an issue of critical importance to the nation's future. To achieve this mission, the Center sponsors a wide variety of research projects, transmits new findings to a broad audience, trains new scholars, and broadens access to valuable data sources.
This paper examines methods of decomposing a difference in levels between groups for a dependent variable such as income. Applied to regression equations, this technique estimates the contribution to the difference from divergent characteristics and divergent rates of converting characteristics into the dependent variable. The consequences of an "interaction" component being present in the decomposition is examined. The paper, using data from the 1960 Census, shows how ignoring the interaction term can influence results. n n comparative social research investigators frequently
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