The wage of an individual is observed only when he/she is employed. However, getting employment requires two decisions. First, an individual has to decide to participate in the labour market, and second, an employer must decide to hire that individual. Since female labour market participation often differs from that of men, and employers’ decisions to hire may also be influenced by gender, it is appropriate to account for this double selection process. This study uses the latest household survey in Ghana to estimate gender wage gaps by correcting for this double selection process. We find that the average total gender wage gap is positive and significant irrespective of the sample selection correction method used. Our results indicate that women on average receive lower wages than men. Irrespective of the type of selection method used, our findings suggest that almost all the wage gap is a result of differences in returns, with only a small part coming from differences in observables. We find that the gender wage gap is smaller among formal wage employees and the gap decreases as education level increases. Although our findings indicate a similar trend in the wage gap across all specifications, the magnitude of the gap is sensitive to the choice of the model. This points to the need to be cautious about the choice of sample selection correction used to analyse gender wage gaps.
Gender Wage Gap: A Semi-Parametric Approach with Sample Selection Correction