Earnings and Social Background: An evaluation of caste/ethnic wage differentials in the Nepalese labor market

Mainali, R. M., Jafarey, S. & Montes-Rojas, G. (2013). Earnings and Social Background: An evaluation of caste/ethnic wage differentials in the Nepalese labor market (Report No. 13/01). London, UK: Department of Economics, City University London.

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Abstract

This paper examines the sources of wage differentials among caste/ethnic groups, employing national survey data from Nepal. Our study shows that, in countries such as Nepal which have imperfect labour markets, the conventional Oaxaca decomposition methodology fails to estimate precisely the source of wage differential. Using an extended model, occupational choice, firm size distribution and the interaction between these two are employed along with the conventionally used measures of human capital endowments of different groups, to estimate these effects. Our results indicate that the lack of access to better paying occupations and larger firms, rather than differences in human capital, are the main factors underlying the caste/ethnic wage differentia in Nepal. Furthermore, empirical evidence is not found in favour of government policy of "affirmative action" to contribute yet in narrowing down the caste/ethnic wage differential in the labour market.

Item Type: Monograph (Discussion Paper)
Additional Information: © 2013 the authors
Uncontrolled Keywords: Labour Market Discrimination, Caste, Ethnicity
Subjects: H Social Sciences > HB Economic Theory
Divisions: School of Social Sciences > Department of Economics > Department of Economics Discussion Paper Series
URI: http://openaccess.city.ac.uk/id/eprint/2017

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