Gender Discrimination in Earnings in Indonesia: A Fuller Picture

Abstract

This article analyses data from the 2007 Indonesia Family Life Survey in order to decompose the gender gap in earnings into explained and unexplained gaps, not only at the mean but also across the entire distribution. Women earned about 30% less than men, in both paid work and self-employment. The explained gap accounts for only about a quarter of the gap in paid work but for about half of the gap in self-employment. When the decomposition is made across the earnings distribution, the total gap decreases with earnings in both paid work and self-employment, and both conditional and unconditional on characteristics. In both employment sectors, the explained gap remains similar across the distribution, and therefore the unexplained gap drives the decrease in the total gap. The unconditional decomposition across the distribution provides great insight into the dynamics that are obscured in results derived from decomposition at the mean.

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