The Male-Female Wage Differentials in Indonesia

While it is a general fact that women earn less than men do, the source of the wage difference is not well understood. This paper presents the results of two empirical studies on the issue of female-male wage differentials: the econometric analysis on the determination of wages and the measurement of gender-based wage discrimination in the labour market. The results suggest that wage discrimination exists, but its contribution to the female-male wage differentials is declining. Comparing the actual and potential wages, it is also shown that women already in the labour market are `selected' individuals who are lucky enough to experience less discrimination.