Gender Wage Discrimination in Rural and Urban Labour Markets of Bangladesh

Female wages in Bangladesh are significantly lower than male wages. This paper quantifies the extent to which discrimination can explain this gender wage gap across the rural and urban labour markets of Bangladesh, using unit record data from the 1999-2000 Labour Force Survey. The gender wage differential is decomposed into a component that can be explained by differences in productive characteristics and a component not explained by observable productive differences, which is attributed to discrimination. An attempt is also made to improve on the standard methodology by implementing a wage-gap decomposition method that accounts for selectivity bias, on top of the usual "explained" and "unexplained" components. Analytical results from this paper show that gender wage differentials are considerably larger in urban areas than in rural areas and a significant portion of this wage differential can be attributed to discrimination against women. The results also show that selectivity bias is an important component of total discrimination.