Analysis of gender wage gap and the Nigerian labour market: a new empirical evidence

Abstract

Purpose

This study investigated the gender wage gap in Nigeria by analysing two waves of household surveys (in 2003–2004 and 2018–2019) in order to understand the dynamics or polarisation of the labour market in Nigeria in terms of the gender wage gap over time.

Design/methodology/approach

The study applied an extension of Oaxaca–Blinder decomposition that relies on the re-centred influence function (RIF) regressions to analyse the gender wage gap at all points along the wage distribution.

Findings

The results unambiguously show that there is a significant gender wage gap in Nigeria at all points along the wage distribution, such that for the two surveys used and after nearly two decades, men still earn more than women. That is, the log wage difference between males and females is statistically significant at all points between the 10th and the 90th quantiles. In 2003–2004 period, the authors found that most of the wage difference was significantly accounted for by the wage structure effect, whilst the composition effect was negative and only significant at the bottom of the wage distribution. Since the 2018–2019 period, the authors found that there has been a visible change such that most of the gender wage gap is now accounted for by the composition effect at all points along the wage distribution. Another interesting finding is that there has been a general decline in the gender wage gap along the entire wage distribution, such that inequality was higher in 2003–2004 than in 2018–2019. This decline is bigger at the top than at the bottom of the wage distribution. The authors also found that, contrary to some of the studies on the wage gap, the raw gaps for the two surveys appear to show inverted U-shape, but the gap has fallen quickly since the 2018–2019 period. Thus, the authors found strong evidence of a “sticky floor” compared to a “glass ceiling” effect in both periods, and this becomes more pronounced over time. In terms of the contributions of individual covariates on gender pay gap in Nigeria, the authors found that urban residence, unionisation, education and occupation variables exhibit major influence. However, the effects of covariates on the composition and wage structure components of the wage gap have changed over time.

Practical implications

The major policy implication of these findings is that to address the gender wage gap in Nigeria, policy should focus more on how labour is rewarded and improving human capital for women.

Originality/value

This study is a novel paper in Nigeria that has investigated the gender wage gap in Nigeria by extending the focus of literature in three ways. First, the authors applied an extension of Oaxaca–Blinder decomposition that relies on the RIF regressions to analyse the gender wage gap at all points along the wage distribution. Second, the authors used sample selection bias to account for the non-randomness of participation in wage employment. And third, the authors applied similar analysis to two waves of household surveys (in 2003/2004 and 2018/2019) in order to understand the dynamics or polarisation of the labour market in Nigeria in terms of the gender wage gap over time.