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An Analysis of the Reduction of the Ethnic Economic Gap in Malaysia under the New Economy Policy: Evidence from Ethnic Occupation Segregation and Wage Differential

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  • Shahiri, Hazrul Izuan

    (Fakulti Ekonomi dan Pengurusan Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor MALAYSIA)

Abstract

This paper estimates the ethnic economic gap in Malaysia before the New Economic Policy (NEP) in 1970 and after the end of the NEP in 1986. Specifically, this paper uses the Duncan Dissimilarity Index to estimate occupation segregation between ethnic Malays and the ethnic Chinese; ethnic Malays and ethnic Indians; and the ethnic Chinese and ethnic Indians before and after the policy. Next, the paper estimates the wage gap between the three ethnicities by using A Generalized Oaxaca Decomposition, both before and after the NEP. The data of this study is obtained from two principal sources. Data concerning wage and salary figures is obtained fromthe1966-67 West Malaysian Family Survey; 1976-77 First Malaysian Family Life Survey; and the 1988 Second Malaysian Family Life Survey. The other sources of data variables are obtained from the 1970 Population Census of Peninsular Malaysia; the 1980 Population Census of Peninsular Malaysia; and the 1991 Population and Housing Census of Malaysia. The study finds that occupation segregation was reduced between all ethnicities by the end of the NEP. However, the wage gap between the ethnic Chinese and ethnic Malays; and the ethnic Chinese and ethnic Indians continued to rise after 1986.Additionally, while the wage gap decreased between ethnic Malays and ethnic Indians in some specific occupations, the wage gap increased between ethnic Malays and the ethnic Chinese in all specific occupations during the same period.

Suggested Citation

  • Shahiri, Hazrul Izuan, 2012. "An Analysis of the Reduction of the Ethnic Economic Gap in Malaysia under the New Economy Policy: Evidence from Ethnic Occupation Segregation and Wage Differential," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 46(2), pages 127-139.
    • Handle: RePEc:ukm:jlekon:v:46:y:2012:i:2:p:127-139
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    References listed on IDEAS

    as
    1. Ishak Shari, 2000. "Economic Growth And Income Inequality In Malaysia, 1971–95," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 5(1-2), pages 112-124.
    2. Tony Fang & John S. Heywood, 2010. "Immigration, Ethnic Wage Differentials and Output Pay in Canada," British Journal of Industrial Relations, London School of Economics, vol. 48(1), pages 109-130, March.
    3. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259, Elsevier.
    4. repec:eee:labchp:v:3:y:1999:i:pc:p:3143-3259 is not listed on IDEAS
    5. Leping, Kristian-Olari & Toomet, Ott, 2008. "Emerging ethnic wage gap: Estonia during political and economic transition," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 599-619, December.
    6. Gallup, John, 1997. "Ethnicity And Earnings In Malaysia," Harvard Institute for International Development (HIID) Papers 294413, Harvard University, Kennedy School of Government.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Oaxaca; Occupation; segregation; wage;
    All these keywords.

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