Earning Differentials between Working Groups: An Analysis Based on Oaxaca-Blinder Decomposition Approach

Inequality of earnings between men and women from economic activities is a common phenomenon in the developing countries like Bangladesh. Similarly, wage differential between the government and private (or non-government) employees is also found in these courtiers. Thus, analysis of earning gaps from the perspectives of gender, and public-private sectors has received significant attention of the researchers in the context of developing countries. This study aims at assessing the wage gaps from the above perspectives to achieve better understanding about the extent of discrimination in wage between different groups of employees through performing a decomposition analysis. This is an empirical study in the context of Rajshahi City on the basis of primary data that are collected randomly from selected employees involved in different job sectors. It explores the wage gaps between male and female employees, and between government and non-government employees. The widely accepted Oaxaca-Blinder Decomposition method is applied to analyze the wage differentials towards recognizing as to how far the current wage gap can be attributed to differences in the characteristics of employees and to labor market discrimination. The results of the decomposition analysis show that male employees and public sector employees earn on average 35.6% and 71.2% more than the female and private sector employees, respectively. Finally, the study suggests that appropriate policy reforms need to be done to reduce the earning gaps between men-women as well as public-private employees.