UNDERSTANDING THE GENDER WAGE GAP IN THE FORMAL AND INFORMAL SECTORS OF THE GHANAIAN ECONOMY
- Kwadwo Opoku
- Emmanuel Adu Boahen
- George Domfe
- ( paper pages. 263 - 294 )
Abstract
This paper investigated how gender wage
inequality varies across formal and informal enterprises in Ghana. Applying a
multinomial logit model on the data set of the seventh round of the Ghana
Living Standard Survey (GLSS 7), we found that individual and household
characteristics have gendered differential effects on the probability of
working in the formal and informal wage sectors. We observed that while the likelihood
of working in the formal sector increases for both men and women with higher
levels of education, the opposite is the case for higher levels of education in
the informal wage sector. Using the Dubin-McFadden (DMF) and Lee control
function approaches to control for both observable characteristics and
endogenous selection bias in formal and informal jobs, it was observed that
while the raw gender wage gap in formal employment is overestimated as a result
of the observable characteristics and selection process, that of the informal
sector tends to be underestimated for the same reasons. In both formal and
informal employment, we observed gender wage discrimination against women. This
therefore indicates the importance of enforcing regulations against gender
discrimination and expanding regulated formal employment to accommodate more
women in the effort to reduce gender wage gaps in Ghana.
Citation
Kwadwo Opoku, Emmanuel Adu Boahen, George Domfe.
2024.
"UNDERSTANDING THE GENDER WAGE GAP IN THE FORMAL AND INFORMAL SECTORS OF THE GHANAIAN ECONOMY"
The Nigerian Journal of Economic and Social Studies,
66 (2): 263 - 294.
JEL Classification
J31, J45 and J46, J81
