Decomposition of Gender Wage Differentials in Iran: An Empirical Study Based on Household Survey Data

Abstract

In this study we investigate the magnitude of wage discrimination against women in the Iranian labor market by decomposing the male-female wage differential into differences in human capital and wage discrimination. We use the Oaxaca decomposition model in our econometric investigation. In our empirical analysis we use Iran’s Household Expenditure and Household Survey (HEIS) data for years 2002 and 2005. Our descriptive analysis suggested a generally low participation of women in labor market in both years. The Oaxaca decomposition model results suggest that in both, public and private, sectors a significant share of wage differentials is attributable to discrimination. Furthermore the gender difference in the quality of labor force (human capital) is estimated to be approximately equal and in some cases even superior for women. Oaxaca decomposition for separate skill categories suggests that wage discrimination for specialists and scientists category is relatively smaller than for less skilled employees.