THE GENDER WAGE THE GENDER WAGE GAP IN SRI LANKAGAP IN SRI LANKA

Dileni GunewardenaDileni GunewardenaUniversity of Peradeniya, Sri LankaUniversity of Peradeniya, Sri Lanka

A revised proposal submitted to the PEP research A revised proposal submitted to the PEP research networknetwork

Primary objective of the studyPrimary objective of the study

To better understand the To better understand the factors underlying the factors underlying the gender wage gap in Sri gender wage gap in Sri

LankaLanka

Gender wage gapGender wage gap The gap between average male and The gap between average male and

female wagesfemale wages In practically every country in the world, In practically every country in the world,

women earn less on average than men women earn less on average than men (World Bank 2001)(World Bank 2001)

Simon Perera, labourer, Colombo’s main wholesale

market. --Daily News/REUTERS 2nd April

2003

Tea-plucker, Matale,

--April 2005

Why Why Sri LankaSri Lanka??

Sri Lanka’s performance on gender Sri Lanka’s performance on gender rights and outcomes is good rights and outcomes is good

o High GDI, GEM not as goodHigh GDI, GEM not as goodo Low maternal mortalityLow maternal mortalityo Parity in primary school enrolmentParity in primary school enrolmento Higher female secondary school Higher female secondary school

enrolment enrolment o Gender equality a fundamental right Gender equality a fundamental right

(1978 constitution) (1978 constitution) o Equality of wages legislatedEquality of wages legislated

Why Why Sri Lanka?Sri Lanka?

Sri Lanka is in many senses a model—Sri Lanka is in many senses a model—where many countries would like to where many countries would like to be.be.

Therefore this study hopes to provide Therefore this study hopes to provide answers to questions likeanswers to questions like

How did Sri Lanka get there? What How did Sri Lanka get there? What factors helped?factors helped?

When Sri Lanka “got there” who was When Sri Lanka “got there” who was left behind, and why? left behind, and why?

Explanations for the existence of a Explanations for the existence of a gender wage gapgender wage gap

women have fewer of the productive characteristics women have fewer of the productive characteristics (education, training, skills, experience) that earn (education, training, skills, experience) that earn higher wages higher wages (Human capital theory)(Human capital theory)

women are discriminated in the labour market in women are discriminated in the labour market in the sense that they are paid less for the same the sense that they are paid less for the same productive characteristics (eg. equally educated productive characteristics (eg. equally educated men and women with the same amount of men and women with the same amount of experience will be paid differently)—experience will be paid differently)—residual residual definitiondefinition

women choose, or are forced into lower-paying women choose, or are forced into lower-paying occupations occupations (occupational choice/segregation)(occupational choice/segregation)

they are less likely to be hired into public sector they are less likely to be hired into public sector employment where parity is observed, and employment where parity is observed, and

women are a greater proportion of the labour force women are a greater proportion of the labour force in economically less developed (rural) areas.in economically less developed (rural) areas.

lnW*lnW*mm- lnW*- lnW*ff = = mm(X*(X*mm -X* -X*ff ) + X* ) + X*ff((m - m - f f ) ) [Total difference][Total difference] [Characteristics][Characteristics] [Returns to [Returns to

characteristics]characteristics]

lnW* = predicted mean (log) earnings (wages) lnW* = predicted mean (log) earnings (wages)

X* = mean characteristics of males (m) and femalesX* = mean characteristics of males (m) and females

lnW*lnW*mm- lnW*- lnW*ee = = ff(X*(X*mm -X* -X*ff ) + X* ) + X*mm((m - m - f f ) )

lnWij = Xij bj + eij, individual i, group j Wij = individual earnings (wages) Xij = individual characteristics bj = vector of parameters eij = zero mean error term, uncorrelated with Xij

Earnings FunctionEarnings Function

Blinder-Oaxaca Decomposition

What do we know about the gender What do we know about the gender wage gap in Sri Lanka?wage gap in Sri Lanka?

There is no consistent gender wage gap series for There is no consistent gender wage gap series for Sri Lanka (CEDAW 2002)Sri Lanka (CEDAW 2002)

Existing studies Existing studies (Aturupane 1997, Ajwad and (Aturupane 1997, Ajwad and Kurukulasuriya 2002, Gunewardena 2002)Kurukulasuriya 2002, Gunewardena 2002) following standard methodology (Blinder 1973, following standard methodology (Blinder 1973, Oaxaca 1973)Oaxaca 1973) indicate discrimination, rather than indicate discrimination, rather than differences in productive characteristics, account differences in productive characteristics, account for a large proportion (all) of the gender wage for a large proportion (all) of the gender wage gap. gap.

The size of the wage gap differs by ethnicity The size of the wage gap differs by ethnicity (Ajwad and Kurukulasuriya 2002) and occupation (Ajwad and Kurukulasuriya 2002) and occupation (Chandrasena 2005) (Chandrasena 2005)

Acrobat Document

Acrobat Document

What do we need to know?What do we need to know?

1.1. What has been happening to the gender What has been happening to the gender wage gap wage gap over timeover time? Specifically, what trends ? Specifically, what trends in the wage gap can be observed during a in the wage gap can be observed during a time when important shifts in female labour time when important shifts in female labour supply and demand can be observed? supply and demand can be observed?

Importance: Time period when female LFP has Importance: Time period when female LFP has been increasing—demand (export industries) been increasing—demand (export industries) driven?—can facilitate further driven?—can facilitate further researchresearch—esp. —esp. on on the interactions between trade, growth the interactions between trade, growth and gender inequality—and input into and gender inequality—and input into policy.policy.

Objective 1Objective 1

to construct a gender wage to construct a gender wage gap series for Sri Lankagap series for Sri Lanka using using pooled individual records from pooled individual records from quarterly labour force survey quarterly labour force survey data (QLFS) for the past 9 years, data (QLFS) for the past 9 years, which will be disaggregated by which will be disaggregated by occupation, industry, location occupation, industry, location and educational level.and educational level.

What do we need to know?What do we need to know?

What contributes more to the overall What contributes more to the overall gender wage gap? gender wage gap? Occupational Occupational segregationsegregation, or , or gender differentials gender differentials within occupationswithin occupations??

Importance: understand the Importance: understand the contribution of occupational contribution of occupational segregation to the wage gap, segregation to the wage gap, how how this has changed in the last 9 yearsthis has changed in the last 9 years and provide the basis for further and provide the basis for further research and policy.research and policy.

Objective 2Objective 2

perform a (occupational perform a (occupational structure) decomposition structure) decomposition exerciseexercise to divide the overall to divide the overall gender gap into a portion explained gender gap into a portion explained by the distributional and pay by the distributional and pay differences across occupations and a differences across occupations and a portion due to distributional and pay portion due to distributional and pay differences within occupations, differences within occupations, following Kidd and Shannon (1996).following Kidd and Shannon (1996).

What do we need to know?What do we need to know?

2.2. How have the How have the determinants of determinants of earningsearnings changedchanged over the past over the past decade, and how have these been decade, and how have these been different for men and women? Has different for men and women? Has “discrimination” increased or “discrimination” increased or decreased?decreased?

Importance: consistent comparison of Importance: consistent comparison of how determinants (and how determinants (and decomposition into characteristics decomposition into characteristics and “discrimination”) have changed and “discrimination”) have changed over timeover time. Useful for research and . Useful for research and policy.policy.

Objective 3Objective 3 apply regression analysisapply regression analysis to pooled to pooled

individual records from selected years individual records from selected years in this 9 year period in this 9 year period to examine the to examine the determinants of male and female determinants of male and female earningsearnings, focusing on education, , focusing on education, experience, occupational structure, experience, occupational structure, sector of employment (public or sector of employment (public or private) and spatial location. Apply private) and spatial location. Apply standard B-O decomposition.standard B-O decomposition.

What do we need to know?What do we need to know?

3.3. How have the How have the determinantsdeterminants of earnings of earnings been been differentdifferent for men and women in for men and women in different parts of the earnings different parts of the earnings distributiondistribution??

Does the extent to which discrimination Does the extent to which discrimination accounts for the wage gap differ in accounts for the wage gap differ in different parts of the earnings distributiondifferent parts of the earnings distribution—is there a —is there a glass ceiling or a sticky floorglass ceiling or a sticky floor??

Importance: If there is a sticky floor, this Importance: If there is a sticky floor, this means those most affected by gender means those most affected by gender discrimination are the poorest—influence discrimination are the poorest—influence labour market policy so wages at the labour market policy so wages at the bottom are more equal.bottom are more equal.

Objective 4Objective 4

use quantile regression use quantile regression techniquestechniques to control for to control for individual and job characteristics individual and job characteristics at different points of the at different points of the distribution and calculate the part distribution and calculate the part of the gap attributable to of the gap attributable to difference in returns to difference in returns to characteristics (“discrimination”).characteristics (“discrimination”).

What do we need to know?What do we need to know?

4.4. WhereWhere (in relation to which factor) is (in relation to which factor) is discrimination occurring more—or discrimination occurring more—or most? in relation to most? in relation to education, education, experience, occupation, sector of experience, occupation, sector of employmentemployment??

Importance: understand Importance: understand which policy which policy variables are most important, variables are most important, and and how they should be influencedhow they should be influenced

Objective 5Objective 5 use a recently developed methodology [Yun use a recently developed methodology [Yun

2003] to 2003] to perform a detailed perform a detailed decomposition of the gender wage gapdecomposition of the gender wage gap in order to identify the specific in order to identify the specific contributions of education, experience, contributions of education, experience, occupational structure, and public sector occupational structure, and public sector employment to the gender wage gap; and employment to the gender wage gap; and to identify within each of these categories, to identify within each of these categories, what proportion of the gap is due to what proportion of the gap is due to “discrimination” vs. endowment “discrimination” vs. endowment differences. differences.

Summary of ObjectivesSummary of ObjectivesFor all years from 1996-2004For all years from 1996-2004(1) to construct a gender wage gap series for Sri Lanka(1) to construct a gender wage gap series for Sri Lanka(2) perform a decomposition exercise to divide the overall gender (2) perform a decomposition exercise to divide the overall gender

gap into within and across occupation componentsgap into within and across occupation components

For selected years within this periodFor selected years within this period(3) examine the determinants of male and female earnings, (3) examine the determinants of male and female earnings,

aggregated decomposition of the wage gap, and how they have aggregated decomposition of the wage gap, and how they have changed over timechanged over time

(4) use quantile regression techniques to control for individual and (4) use quantile regression techniques to control for individual and job characteristics at different points of the distribution and job characteristics at different points of the distribution and calculate the part of the gap attributable to difference in returns to calculate the part of the gap attributable to difference in returns to characteristicscharacteristics

(5) to perform a detailed decomposition of the gender wage gap in (5) to perform a detailed decomposition of the gender wage gap in order to identify the specific contributions of education, order to identify the specific contributions of education, experience, occupational structure, and public sector employment experience, occupational structure, and public sector employment to the gender wage gap to the gender wage gap

Summary of ObjectivesSummary of ObjectivesFor all years from 1996-2004For all years from 1996-2004

(1) to construct a gender wage gap series for Sri Lanka(1) to construct a gender wage gap series for Sri Lanka

(2) perform a decomposition exercise to divide the overall gender gap into (2) perform a decomposition exercise to divide the overall gender gap into within and across occupation componentswithin and across occupation components

For selected years within this periodFor selected years within this period

(3) examine the determinants of male and female earnings, aggregated (3) examine the determinants of male and female earnings, aggregated decomposition of the wage gap, and how they have changed over timedecomposition of the wage gap, and how they have changed over time

(4) use quantile regression techniques to control for individual and job (4) use quantile regression techniques to control for individual and job characteristics at different points of the distribution and calculate the characteristics at different points of the distribution and calculate the part of the gap attributable to difference in returns to characteristicspart of the gap attributable to difference in returns to characteristics

(5) to perform a detailed decomposition of the gender wage gap in order (5) to perform a detailed decomposition of the gender wage gap in order to identify the specific contributions of education, experience, to identify the specific contributions of education, experience, occupational structure, and public sector employment to the gender occupational structure, and public sector employment to the gender wage gap wage gap

Data sourcesData sources

Individual records (about 7000 Individual records (about 7000 observations per year) from the observations per year) from the Quarterly Quarterly LabourLabour Force Surveys (QLFS) Force Surveys (QLFS) from 1996 to from 1996 to the latest completed year (2004) the latest completed year (2004) conducted by the Department of Census conducted by the Department of Census and Statistics, Sri Lanka (DCS-SL).and Statistics, Sri Lanka (DCS-SL).

SpecificallySpecificallyo Gender wage gap series and Kidd and Shannon Gender wage gap series and Kidd and Shannon

decomposition for all years from 1996-2004.decomposition for all years from 1996-2004.o Cross section analysis (OLS, quantile and Yun Cross section analysis (OLS, quantile and Yun

decomposition) for 3 separate years within this decomposition) for 3 separate years within this time period.time period.

Thank you!Thank you!