Sectoral Wage Differentials in Bangladesh: A Comparison Between the Government and Other Ownerships

Abstract

Most of the studies of wage discrimination in Bangladesh have calculated the gap between pairs of sectors, while this study uses multiple sectors using multinomial logit estimation where the sector selection is endogenous. The employment sector is divided into six heterogeneous sectors depending on ownership status. Using QLFS 2016–2017 data from the Bangladesh Bureau of Statistics, the probability of being employed in a certain sector is initially estimated by the sector choice equation, and then we estimate both the conditional and unconditional wage gaps between government and other sectors. The estimation result of the sector choice shows that the probability of being included in the government sector mostly depends on educational qualification, and the rural population is mostly included in marginal sectors like individual proprietorship. The decomposition of wage discrimination indicates that government employees have a wage advantage over every other sector, except for females. The decomposition result also suggests that the wage gap is mostly driven by discrimination, with NGOs showing the most discrimination in wages offered, followed by the individual sector. Monitoring the wage structure and implementation of the minimum wage is our main policy recommendation, along with others.