The aggregate gains of eliminating gender and ethnic gaps in the Malaysian labor market

Abstract

We use microdata to calculate the gains of eliminating gender and ethnic labor market gaps in Malaysia for the period 2010–2017. We document significant gaps in terms of participation in the labor market and entrepreneurship, distinguishing between employers and self-employed. Female-male ratios are 64% for labor market participation, 82% for self-employment, and 32% for being employers. Across different age and ethnic groups, gender gaps in labor force participation are particularly pronounced for older workers and in entrepreneurship for Chinese workers. Our results indicate substantial income gains if gender and ethnic gaps were eliminated. Eliminating the entrepreneurship gender gaps increases income per capita by 6.54% in the long run. When we also include the employment gender gap, the long-run gains are 26.18%. The elimination of ethnic gaps could in the long run result in a smaller but still sizeable increase in income per capita of 11.5%.