Reassessing the Gender Wage Gap in Madagascar: Does Labor Force Attachment Really Matter?

In the labor economics literature, it has been argued that differences in labor force attachment across gender are important to explain the extent of the gender wage gap. However, measures of women's work experience are particularly prone to errors given discontinuity in labor market participation. Using proxy measures such as potential experience may lead to biased estimates of the returns to human capital. Such biases cannot be ignored since these returns are used in the standard decomposition techniques to measure the extent of gender-based wage discrimination. By matching two original surveys conducted in Madagascar in 1998-a labor force survey and a biographical survey-we built a unique data set that enabled us to combine the original information gathered from each of them, particularly the earnings from current employment and the entire professional trajectories. Our results lead to a reassessment of the returns to human capital as potential experience always exceeds actual experience for both males and females. By using actual experience, we obtain a significant increase in the portion of the gender earnings gap explained by observable characteristics, while the differences in average actual experience across sexes lead to markedly different estimates of the fraction of the gender gap explained by experience. (c) 2009 by The University of Chicago. All rights reserved..