Measuring the gender-wage differential and discrimination in the Eritrean labour market

Bibliography: leaves 84-87.The objective of the study is to measure and investigate the sources of gender-wage differentials in the Eritrean labour market. The study uses primary data drawn from the Income and Expenditure Household Survey collected by National Statistics Eritrea in 1997. Three separate standard wage functions for males, females and a pooled one for both sexes are estimated, in which, the dependent variable (semi-log monthly wage) is a linear function of years of schooling, experience, experience squared, and hours worked, and dummy variables capturing, occupations, ethnicity, industry, employer, marital status, fighters (represents whether the individual employee belong to the group who participated in the army struggle for independence or not). The decomposition exercise involved subtracting the female wage equation from the male wage equation, and then the wage differential that is found is in tum decomposed using the standard Oaxaca -Blinder (1973) procedure. The econometric result showed that women earned about 66 % of what men earned. The wage differentials are decomposed into two components, the differential due to the measurable variables and that due to discrimination. The results from the decompositions of the gender-wage differentials show that 18 % of the wage differentials result from discrimination, while 82 % is accounted for by the measurable variables. These results signal that gender-wage differentials emanate both from human capital differences and unequal treatment in the labour market. The results from the wage equation of female workers showed that human capital followed by the variable fighters, hours worked per a week, marital status, industrial sectors, and type of employer were important determinant of female wages. Place of work and occupations were the least important, and ethnicity was insignificant in the wage determination process of the female employees. Likewise, the human capital followed by the variable fighter, place of work and occupations were important variables in determining the male wages. Ethnicity, industrial sectors, employer and marital status were least important in the wage determination process of the male employees in Eritrea in 1997