Measuring the Extent and Components of the Gender Wage Differential in the Philippines

This paper investigates the existence, extent, and sources of the gender wage differential in the Philippines, using data from the Labor Force Survey of the third quarter of 1988. Coefficient estimates of separate wage regressions for male and female workers (using Heckman's two-step procedure to control for possible sample selectivity) are use to calculate the magnitude of the gross gender wage differential and to decompose it into four components, namely: (a) the benefits that male wage earners receive because of nepotism, (b) the losses that female wage earners suffer because of discrimination, (c) differences in the productivity-determining characteristics of male and female wage earners, and (d) sample selectivity. The paper finds that the wage structures of male and female workers are apparently quite different: Women tend to derive higher rates of return from education and lower rates of return from tenure, employment in the private sector, and residence in regions other than National Capital Region; men tend to obtain high rates of return from industry affiliation and low rates of return from occupational status. The paper also finds that, if self-selection in the wage earning samples is controlled for, the wage of average male worker in 1988 turns out to be about 25 percent higher that of the average female worker. Moreover, the logarithmic decomposition of this wage differential reveals that gender discrimination in the labor market may distort the male-female wage ratio by as much as 52 percent of what it would be in the absence of discrimination - when, irionically, men are measured to be less productive than women by as much as 18 percent and male wage earners are found to be less able at wage earning than men who are engaged in other economic pursuits.