Reassessing the Gender Wage Gap: Does Labour Force Attachment Really Matter? Evidence from Matched Labour Force and Biographical Surveys in Madagascar

Assessing gender inequalities has become one of the key issues of the new international poverty reduction strategies implemented in most LDCs in the past few years. It has been argued that differences in labour force attachment across gender are important to explain the extent of the gender earnings gap. However, measures of women's professional experience are particularly prone to errors given discontinuity in labour market participation. For instance, the classical Mincerian approach, where potential experience is used as a proxy for actual experience due to lack of appropriate data, has its limits in estimating the true returns to human capital. Such biases in the estimates cannot be ignored since the returns to human capital 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 labour force survey and a biographical survey - we built a unique dataset 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 an upward reappraisal of returns to experience, as potential experience always exceeds actual experience, for both males and females. In addition, controlling for further qualitative aspects of labour force attachment, we obtain a significant increase in the portion of the gender 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 earnings gap explained by experience.