Regional and sectoral wage disparities as a reflection of inequality: The case of Kazakhstan

Abstract

In today’s world, many countries, including Kazakhstan, are facing growing income inequality, poverty, and an increasing polarization of society. These challenges threaten social stability and make it difficult to achieve the Sustainable Development Goals. The purpose of this study is to investigate the size and trends of regional and sectoral wage disparities in Kazakhstan, as well as to create a typology based on the average wage levels in different regions and to provide recommendations for reducing income inequality. The study tested hypotheses about the relationship between the average nominal wage and the level of GRP, level of education, industry specialization, type of ownership, and size of enterprises. The methods of expert survey, correlation, and cluster analysis were used. The study revealed the tendency of increasing inequality of labor income. The largest differences between wages in extractive industries and agriculture were revealed in the Atyrau (11.5) and Mangystau (9.2) regions and Astana (7.2). Differences in average wages between regions were estimated at 1.7 to 7.8 times. The most significant factors affecting the level of average wages are gross regional product per capita and the share of gross value added of the quasi-public sector in the gross regional product. In order to reduce differences in wages, it is recommended to introduce progressive taxation, apply regional increasing coefficients, and calculate the minimum wage based on the hourly wage rate.