Effects of labor market institutions and establishment characteristics on gender wage inequality in Africa: Evidence from industry survey data in Nigeria

Abstract

Purpose

The purpose of this paper is to investigate the major determinants of establishment level gender pay gap, with a particular focus on analysing the effects of labor market institutions.

Design/methodology/approach

A two‐stages procedure is used in analysing the varying impacts of labor market institutions and firm level characteristics on gender wage gaps in the Nigerian urban labor market, using information from worker and establishment level survey data.

Findings

Primarily it was found that labor market institutions such as unions, and firm characteristics such as ownership, affect the level of gender wage inequality at the firm level. It was also found that unions have significant influence on firm level gender wage gaps in Nigeria, where they are historically known to be strong. Specifically the paper shows that wage gaps are higher in unionized firms in Nigeria because women are generally less likely to join unions, thus being less likely to benefit from union‐induced wage premiums; and within unionized firms a higher rate of unionization tends to reduce gender wage gaps because the higher the rate of unionization in a firm, the higher becomes the probability of women being members, and that raises the likelihood that they get union induced wage premiums. Public enterprises however are found to be more gender‐egalitarian compared with private firms; and firm level investment on workers' training plays an important gender wage‐gap narrowing role.

Originality/value

The paper is original in that it investigates the relationships between institutions and labor market outcomes in an African context, using survey data from the most populous country in the region.

Citation

Temesgen, T. (2008), "Effects of labor market institutions and establishment characteristics on gender wage inequality in Africa: Evidence from industry survey data in Nigeria", International Journal of Sociology and Social Policy, Vol. 28 No. 9/10, pp. 309-325. https://doi.org/10.1108/01443330810900167