Estimating Gender Wage Gap and Its Decomposition in Pakistan

Abstract

This study estimates the gender wage gap in Pakistan by applying Nopo’s decomposition procedure. This technique is a non-parametric alternative to the Blinder-Oaxaca (B-O) technique of decomposition. It addresses the issue of gender wage gap in the common support and decomposes the total wage gap into four components. One of these components focuses on gender discrimination, while the other three explain individual characteristic differences. For this purpose, the study used Pakistan Social and Living Standard Measurement Survey data for the years 2013-14 and 2018-19. The results of the non-parametric procedure revealed that there was an 18.91% gender wage gap in Pakistan in 2013-14. This figure increased to 29.48% in 2018-19. Furthermore, the results of the decomposition technique showed that about 17.7% and 27.54% of the total wage gap was due to gender discrimination in the labor market in 2013-14 and 2018-19, respectively. In the same time periods, almost 2% was due to the differences in individual characteristics. The policy implication is that the government should chalk out and implement such policies that can decrease gender discrimination in the labor market.