A Decomposition of Male-Female Earnings Differentials

The participation of women in paid economic activities has increased in almost all the countries and Pakistan is no exception.1 However, the quantitative increase in female participation in market production has neither led to qualitative improvements in their lives nor to equality of opportunity and treatment between males and females at home and in the labour market. In emerging global economic scenario, the role of females in a country’s economic development is becoming critical. This will be a major issue in the next century, as welfare of a society can not be improved unless specific measures are undertaken to improve the socio-economic status of women. In this study we intend to examine the role of females in labour market, particularly their earnings relative to the earnings of males. The household data show that in 1993-94 the earning gap between males and females was 43 percent. This was lower than the 63 percent gap reported in 1979 and higher than 33.1 gap reported in 1985-86.2 These changes in male-female earnings gap raise a number of questions, including the following: