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Decomposing Gender Wage Differentials in Urban Ethiopia: Evidence from Linked Employer-Employee (LEE) Manufacturing Survey Data

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  • Tilahun Temesgen

Abstract

This study estimates the magnitude of gender wage differentials for a sample of workers from the Ethiopian manufacturing sector using the traditional Oaxaca-Blinder and an augmented Cotton-Neumark methodologies. In doing so, it separates part of the estimated log of gender wage differential explained by differences in human capital characteristics between men and women from that which is not explained by such differences. The latter is known in the literature as “treatment” component or “discrimination” due to differing pay structures for the two gender groups. Accordingly, it is found that in Ethiopia's manufacturing sector men on average get up to 30% more than women depending on the measure used. However, once we control for a number of individual and establishment level characteristics, the level of wage premium for men over women is close to 5% or around 12 Ethiopian cents per hour. Out of this, both decomposition procedures estimate that close to 60% of the premium is a result of discrimination (different treatment of men and women in the labour market). Using an augmented decomposition technique, it is found that out of the 60% “discrimination component” close to 13% is due to men's treatment advantage in the labour market and the remaining 47% is due to women's treatment disadvantage. Also it is found that firm level characteristics are important contributors to the total discrimination component. Without controlling for establishment level characteristics, the discrimination component would have been around 27% indicating that ignoring establishment characteristics in decomposition exercises would result into a biased estimation, and in this case it would have underestimated the level of discrimination by close to 50%.

Suggested Citation

  • Tilahun Temesgen, 2006. "Decomposing Gender Wage Differentials in Urban Ethiopia: Evidence from Linked Employer-Employee (LEE) Manufacturing Survey Data," Global Economic Review, Taylor & Francis Journals, vol. 35(1), pages 43-66.
    • Handle: RePEc:taf:glecrv:v:35:y:2006:i:1:p:43-66
    DOI: 10.1080/12265080500537250
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    Cited by:

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    2. repec:dau:papers:123456789/4304 is not listed on IDEAS
    3. Unte, Pia & Kemper, Niels, 2015. "Culture and the formation of gender-specific skills in an agrarian society," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113002, Verein für Socialpolitik / German Economic Association.
    4. repec:dau:papers:123456789/4305 is not listed on IDEAS
    5. World Bank, 2009. "Unleashing the Potential of Ethiopian Women : Trends and Options for Economic Empowerment," World Bank Publications - Reports 18862, The World Bank Group.
    6. Christophe Nordman & Anne-Sophie Robilliard & François Roubaud, 2009. "Decomposing Gender and Ethnic Earnings Gaps in Seven West African Cities," Working Papers DT/2009/07, DIAL (Développement, Institutions et Mondialisation).
    7. Christophe J. Nordman & François-Charles Wolff, 2009. "Gender differences in pay in African manufacturing firms," Working Papers hal-00421227, HAL.
    8. Richard U. Agesa & Jacqueline Agesa & Andrew Dabalen, 2013. "Sources of the Persistent Gender Wage Gap along the Unconditional Earnings Distribution: Findings from Kenya," Oxford Development Studies, Taylor & Francis Journals, vol. 41(1), pages 76-103, March.
    9. Nordman, Christophe J. & Robilliard, Anne-Sophie & Roubaud, François, 2011. "Gender and ethnic earnings gaps in seven West African cities," Labour Economics, Elsevier, vol. 18(S1), pages 132-145.
    10. Bedaso, Fenet Jima, 2024. "Occupational Segregation and the Gender Wage Gap: Evidence from Ethiopia," GLO Discussion Paper Series 1393, Global Labor Organization (GLO).

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