Estimating the gender wage gap in Rawalpindi city

Abstract

Studies estimating wage discrimination against women have rarely been conducted for Third World countries, and no research has been directed to this issue in Pakistan at all. This article uses data from Rawalpindi City to calculate the magnitude of the male‐female earnings gap, and identifies the proportion of this gap which results from discrimination as well as that which stems from differences between males and females in productivity characteristics. In addition to the Oaxaca model, the recently developed Cotton/Neumark model is also used to derive estimates. In a new twist to such models, adjustments are made for the presence of selectivity‐bias in the data. The results indicate existence of high levels of discrimination against women, as reflected in estimates of the earnings differentials.