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Son, Hyun H.
ERD Working Paper Series 108
This study develops a decomposition methodology to explain the welfare disparity between male and female workers in terms of three components: segregation, discrimination, and inequality. While segregation captures occupational segregation by gender, discrimination measures the earning differential between males and females within occupations. The inequality component shows the inequality in earnings within male and female groups: if this component is positive (negative), the earning inequality is greater (smaller) among females than males. Based on Atkinson's welfare function, the proposed decomposition methodology takes into account the sensitivity of inequality within occupational groups and also by gender. Moreover, the study proposes a new approach to adjusting earnings by a host of personal and job characteristics such as hours of work, education, work experience, race, and regions and urban/rural areas. The paper also attempts to capture the net effect of each of these individual characteristics on segregation, discrimination, and inequality in earnings between male and female workers. The proposed methodologies are applied to Thailand and Viet Nam.
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