THE GENDER WAGE DIFFERENTIAL IN MALAWI’S FORMAL LABOUR MARKET

Abstract

This study was aimed at analyzing the distribution of wages along gender lines in Malawi. In particular, the study aimed at estimating the gender wage gap, examining the trends in the gender wage gap between 1998 and 2005 and evaluating the effect of education on the gender wage gap. This study was also aimed at unearthing possible sources of the gender wage gap. The study applied the Human Capital Theory as a modeling framework to determine wages. The study used the Blinder-Oaxaca decomposition (Blinder, 1973; Oaxaca, 1973) and Cotton’s decomposition (Cotton, 1988) techniques to estimate the gender wage gap in Malawi. Furthermore, Heckman’s (1977) two step procedure was used to correct for selectivity bias. Cross section data was used in the study obtained from the Integrated Household Surveys 1 and 2 of 1997/98 and 2004/05 respectively. The study found that there is an insignificant wage gap in 1998 and 2005 with females earning more than males. The study also showed that the wage gap had widened between 1998 and 2005. In essence the study found that there was no significant wage differential between men and women in Malawi’s formal labor market. However, the study found that there was a significant wage gap in the private sector of Malawi’s labor market.