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Earnings and Social Background: An evaluation of caste/ethnic wage differentials in the Nepalese labor market

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  • Mainali, R. M.
  • Jafarey, S.
  • Montes-Rojas, G.

Abstract

This paper examines the sources of wage differentials among caste/ethnic groups, employing national survey data from Nepal. Our study shows that, in countries such as Nepal which have imperfect labour markets, the conventional Oaxaca decomposition methodology fails to estimate precisely the source of wage differential. Using an extended model, occupational choice, firm size distribution and the interaction between these two are employed along with the conventionally used measures of human capital endowments of different groups, to estimate these effects. Our results indicate that the lack of access to better paying occupations and larger firms, rather than differences in human capital, are the main factors underlying the caste/ethnic wage differentia in Nepal. Furthermore, empirical evidence is not found in favour of government policy of "affirmative action" to contribute yet in narrowing down the caste/ethnic wage differential in the labour market.

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File URL: http://openaccess.city.ac.uk/2017/1/mainali.pdf
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Bibliographic Info

Paper provided by Department of Economics, City University London in its series Working Papers with number 13/01.

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Date of creation: 2013
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Handle: RePEc:cty:dpaper:13/01

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Postal: Department of Economics, Social Sciences Building, City University London, Whiskin Street, London, EC1R 0JD, United Kingdom,
Phone: +44 (0)20 7040 8500
Web page: http://www.city.ac.uk
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Keywords: Labour Market Discrimination; Caste; Ethnicity;

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  1. Deshpande, Ashwini, 2011. "The Grammar of Caste: Economic Discrimination in Contemporary India," OUP Catalogue, Oxford University Press, number 9780198072034, September.
  2. Juan Pablo Atal & Hugo R. Ñopo & Natalia Winder, 2009. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," IDB Publications 5398, Inter-American Development Bank.
  3. repec:fth:prinin:30a is not listed on IDEAS
  4. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, June.
  5. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  6. Vietorisz, Thomas & Harrison, Bennett, 1973. "Labor Market Segmentation: Positive Feedback and Divergent Development," American Economic Review, American Economic Association, vol. 63(2), pages 366-76, May.
  7. Darity, William A, Jr & Williams, Rhonda M, 1985. "Peddlers Forever? Culture, Competition, and Discrimination," American Economic Review, American Economic Association, vol. 75(2), pages 256-61, May.
  8. William A. Darity & Patrick L. Mason, 1998. "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 63-90, Spring.
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